Special EducationPersonnel Preparation to Improve Services and Results for Children with Disabilities

SUMMARY: The Secretary establishes regulations governing specific

provisions of the Personnel Preparation Program to Improve Services and

Results for Children with Disabilities. The regulations are needed to

implement changes to the Individuals with Disabilities Education Act

(IDEA or the Act) that were adopted as part of the IDEA Amendments of

1997. Specifically, the regulations establish procedures to implement

section 673(h) of IDEA which requires that individuals who receive a

scholarship through personnel preparation projects funded under the Act

must subsequently provide special education and related services to

children with disabilities (or, for leadership personnel, work in areas

related to their preparation) for a period of two years for every year

for which assistance was received. Scholarship recipients who do not

satisfy their service obligation must repay all or part of the cost of

their assistance in accordance with the regulations. The regulations

implement requirements governing, among other things, the service

obligation for scholars, oversight by grantees, repayment of

scholarship, and procedures for obtaining deferrals or exemptions from

service or repayment obligations.

DATES: These regulations are effective January 10, 2000.

FOR FURTHER INFORMATION CONTACT: Renee Bradley, U.S. Department of

Education, 600 Independence Avenue, Washington, DC 20202-2641.

Telephone: (202) 358-2849. If you use a telecommunications device for

the deaf (TDD), you may call at (202) 205-9374.

Individuals with disabilities may obtain this document in an

alternative 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 10, 1998 we published a notice of

proposed rulemaking (NPRM) for this program in the Federal Register (63

FR 37466). In the preamble to the NPRM, we discussed on pages 37466

through 37469 the major provisions proposed to implement the service

obligation requirements. These are summarized below. In several

instances the final regulations contain changes from the NPRM. These

changes are noted below, and are fully explained in the Analysis of

Comments and Changes section of this preamble.

These regulations restate the statutory requirement for the service

obligation under this program, stipulate that the service requirement

applies to individuals who receive scholarship assistance from a funded

project, and clarify that scholarships may be awarded only to

individuals pursuing degrees, licenses, certifications, or endorsements

related to special education, related services, or early intervention

services.

Subpart A--General

Section 304.3 defines key terms used in this part of the

regulations, including related services, special education, academic

year, full-time work, and scholarship.

Subpart B--What Conditions Must Be Met By the Grantee?

Section 304.20 reflects our intention to announce for each

personnel training grant competition a specific percentage, up to 75

percent, of a grantee's total award that must be used to support

scholarships. The provision would allow us to award grants that use

less than the published percentage to pay for scholarships in light of

the unique nature of a particular project. However, because financial

support for graduate assistants is not considered scholarship

assistance, such costs may not be paid from the minimum percentage of

grant funds that must be used to support scholarships.

Section 304.21 stipulates the types of costs that would be

allowable under program grants.

Section 304.22 identifies requirements that grantees must meet in

disbursing scholarships. Paragraph (a) relates to citizenship or

residency requirements. Paragraph (b) requires grantees to limit a

scholarship to the amount by which the cost of attendance at the

institution exceeds the amount of any grant assistance the individual

receives under Title IV of the Higher Education Act. The final

regulation deletes paragraph (c) of the NPRM that specified that

scholarship assistance would be limited to an individual's cost of

attendance for no more than four academic years total, with certain

exceptions (see the discussion in the Analysis of Comments and Changes

section elsewhere in this preamble).

Section 304.23 lists the assurances that must be provided by a

grantee intending to provide scholarships. These include providing a

written agreement with each scholar who receives a scholarship that

specifies the terms and conditions applicable to the scholarship. The

most significant part of this agreement is the requirement that the

scholar provide special education and related services to children with

disabilities or early intervention services to infants and toddlers and

their families on a full-time basis; and for a period of at least two

years for every year for which assistance was received. Paragraph

(b)(2) requires scholars to fulfill their service obligation by working

in a position or positions in which a majority of the persons to whom

the individual provides services are receiving from the individual

special education and related services as defined in Part B of the Act

or early intervention as defined in Part C of the Act. Because scholars

who enter leadership positions related to special education do not

typically serve a classroom or caseload of students, paragraph (b)(3)

would apply a somewhat different standard to the service obligation for

those who receive scholarships from leadership training projects

(section 673(c) of the Act). Those scholars would be required to work

full-time, for a period of at least two years for each year of

assistance, in a position (or positions) in which a majority of the

scholar's time is expended on work related to his or her training

(i.e., special education, related service, or early intervention

leadership).

Section 304.23(b)(4) clarifies that the service obligation

requirements as applied to part-time scholars will be based on the

accumulated academic years of training for which the scholarship is

received.

Section 304.23(c) through (f) respectively identify grantee

assurances related to: scholarship repayment, the grantee's standards

for measuring a scholar's academic progress, the grantee's

responsibility for ensuring compliance with the service obligation

requirements, and the grantee's procedures for notifying scholars in

writing of their service obligation upon their exit from the training

project. A grantee would provide assurances to the Department that it

has established policies or procedures to address each of these

requirements and the remaining requirements in Sec. 304.23, prior to

receiving a training grant under IDEA. In the final regulations,

specific

[[Page 69139]]

reference to a tracking system in Sec. 304.23(e) has been eliminated.

Section 304.23(g) and (h) identifies the requirements governing

maintenance and submission of information related to each scholarship

recipient that enable grantees to monitor compliance of scholars with

the proposed regulations.

Section 304.23(i) requires grantees to notify the Department at the

time an individual has failed to fulfill or has chosen not to fulfill

the applicable service obligation within the appropriate time period.

Subpart C--What Conditions Must Be Met By the Scholar?

Section 304.30 specifies the requirements that a scholar must meet

in order to receive a scholarship under the program including (a) being

enrolled in a course of study leading to a degree, certificate,

endorsement, or license related to special education, related services,

or early intervention services; (b) entering into a written agreement

with the grantee establishing the service obligation requirements; (c)

receiving training at the institution or agency designated in the

scholarship; (d) not accepting educational allowances from any other

entity if that allowance conflicts with the individual's obligations

under the program; (e) maintaining satisfactory academic progress; and

(f) providing information to the grantee. In the final regulation,

Sec. 304.30(f) has been modified to eliminate a specific requirement

for a tracking system and, instead, to require that the scholar provide

information as requested by the grantee.

The final regulation also adds a new Sec. 304.23(g) that requires

the scholar to notify the grantee institution of changes in address,

employment setting, or employment status throughout the duration of the

service obligation.

Section 304.31 identifies circumstances under which a scholar may

receive a deferral or exemption to the repayment requirement.

Section 304.32 specifies the requirements governing the accrual of

interest and assessment of costs that would be included as part of the

individual's payback obligation.

Section 304.32(e) lists the various points at which a scholar

enters repayment status.

Section 304.32(f) authorizes the Department to establish a

repayment schedule that a scholar in repayment status must follow.

Analysis of Comments and Changes

In response to our invitation in the NPRM, thirty-nine parties

submitted comments on the proposed regulations. An analysis of the

comments and of the changes in the regulations since publication of the

NPRM follows.

We discuss other substantive issues under the sections of the

regulations to which they pertain. Generally, we not address technical

and other minor changes--and suggested changes the law does not

authorized the Secretary to make.

Section 304.3 What Definitions Apply to This Program?

Comments: Several commenters requested that we clarify the proposed

definition of ``academic year''. Specifically, these commenters noted

that the NPRM defines ``academic year'' in terms of a full-time course

of study and asked how to interpret the definition, and determine the

required service obligation, for scholars pursuing special education,

related service, or early intervention degrees or certificates on a

part-time basis. Other commenters proposed limiting the definition of

``scholarship'' in the NPRM to exclude disbursements for fees, student

stipends, books, travel, and other types of financial assistance. These

commenters stated that the service obligation provisions in the

proposed regulations should apply only to scholars receiving tuition

assistance since tuition scholarships are typically much higher than

those used to pay other costs.

Discussion: We agree that further clarification of the term

``academic year'', and of how it applies to part-time students, is

needed. Section 673(h) of the Act requires students receiving

scholarship assistance to fulfill a service obligation for a period of

2 years for each year of assistance. The proposed regulations reflected

our interpretation of the Act that the period of the scholar's service

obligation must be calculated based on the period for which the student

was enrolled in a full-time course of study (what constitutes a ``full-

time course of study'' is to be determined by the grantee institution).

Colleges and universities that award IDEA-funded scholarships to part-

time students must, therefore, add up the period for which a part-time

scholar receives a scholarship and calculate the length of the

individual's service obligation based on the number of accumulated

full-time academic years for which the student received financial

assistance. For example, a scholar who obtains a degree after attending

a university on a half-time basis for 4 academic years would accumulate

2 full-time academic years of assistance and have a 4-year service

obligation (2 years for each year of assistance) upon completion of the

program. Thus, the final regulations define ``academic year'' for part-

time students as the equivalent of a full-time academic year based on

the accumulation of part-time periods of study. Also, the work

requirements in Sec. 304.23 of the final regulations clarify that the

period of a scholar's service obligation is dependent on the number of

``academic years'' for which the individual receives scholarship

assistance.

We believe that the definition of ``scholarship'' in the proposed

regulations reflects congressional intent. The Act requires individuals

receiving a ``scholarship'' to fulfill an appropriate service

obligation for every year for which assistance was received. The Act

does not limit the service obligation to students receiving certain

types of assistance. Thus, we interpret ``scholarship'' to refer to all

types of financial assistance that a scholar might receive under an

IDEA-funded project, including assistance used to pay for student fees,

stipends, books, travel, as well as tuition. Moreover, the proposed

regulations followed the Act by basing the service requirements on the

period for which the scholar receives assistance, not on the amount of

assistance an individual receives.

Changes: The proposed definition of ``academic year'' has been

revised to mean a full-time course of study, or the equivalent of a

full-time course of study for a part-time student.

Section 304.20 What are the Requirements for Directing Grant Funds?

Comments: Several commenters expressed concern that requiring

grantees to expend at least 75% of their grant on scholarships would

impede the ability of projects to implement regional training or

distance education programs, or other unique (but costly) training

methods. Other commenters noted similar constraints on projects that

require extensive faculty supervision of scholars and questioned the

basis for the Secretary to impose a cap on a project's nonscholarship

costs. Some commenters also questioned the rationale for not

considering graduate assistantships to be scholarship assistance, as

was explained in the preamble to the NPRM. Finally, one commenter

stated that the minimum percentage of a grant that must be used for

scholarships should be established for each competition rather than on

a project-by-project basis.

Discussion: As the preamble to the NPRM indicates, setting a

minimum percentage of grant funds that must be used for scholarships is

one means of

[[Page 69140]]

addressing the significant shortage of qualified individuals available

to serve certain populations of children with disabilities (e.g.,

children with low-incidence disabilities) and is consistent with

Congress' expectation that personnel training monies be used to support

students pursuing training. We believe that establishing an appropriate

limit on nonscholarship costs offers the most effective option for

addressing well-established personnel shortages in the special

education, related services, and early intervention fields. Moreover,

we recognize the responsibility of States and institutions to provide

necessary training programs and, therefore, consider it appropriate to

focus Federal dollars on student support rather than university program

expenses.

We emphasize that the regulation authorizes the Secretary to

establish a minimum scholarship-directed percentage of up to 75% (i.e.,

the percentage will not exceed 75%). We consider 75% a reasonable level

at which to require scholarship support for some competitions based on

OSEP's extensive review of past budgets for a variety of OSEP training

grants. However, the actual published percentage will be determined on

a competition-by-competition basis depending on the type of projects to

be funded. The feasibility of, and need for, distance education

programs (used, for example, by projects preparing personnel to serve

those with low-incidence disabilities) and other costly features (e.g.,

extended supervision, regional training, etc.) will be taken into

account when the percentage for a grant competition is set. The final

regulations also clarify that the Secretary can allow an exception to

the published percentage for a particular project applicant only in

exceptional circumstances when the Secretary determines that an

exception is necessary to achieve the purposes of the program.

The explanation in the preamble as to how institutions of higher

education (IHEs) should classify costs for graduate assistantships was

intended to clarify the distinction between scholarships that pay for

student expenses and payments made to students in return for working as

graduate assistants. As we indicated in the NPRM, funding for graduate

assistants cannot be considered ``scholarship'' assistance and,

therefore, cannot be included as part of the minimum percentage of

grant funds that must be used to pay for scholarships, since

assistantships are conditioned on the individual working for the

institution. Scholarship assistance, on the other hand, supports the

cost of the student's attendance and is dependent, under section 673(h)

of the Act, on the individual fulfilling a service obligation in return

for that assistance. In order to fulfill Congress' mandate that

students receiving financial support under IDEA subsequently work in

the special education field, we again note that applicants proposing to

use IDEA funds to pay graduate assistants to assist in facilitating or

administering projects must classify those funds as personnel or other

nonscholarship costs and count those costs against the applicable

percentage limit for nonscholarship expenditures. If, as some

commenters indicated, an IHE considers the practical work experience

gained by its graduate assistants as an essential educational component

of the student's training, then we would urge the IHE to incorporate

that work into the student's course of study. In that way, an

individual's tuition-supported scholarship would cover the cost of such

training and students need not be compensated separately for their

work.

Changes: Section 304.20(b) has been amended to clarify that the

Secretary may award a grant that uses less than the published

percentage for scholarships in exceptional circumstances if the

Secretary determines that such an exception is necessary to achieve the

purposes of the program.

Section 304.22 What are the Requirements for Grantees in Disbursing

Scholarships?

Comments: Four commenters expressed concern about limiting scholars

to four years of financial assistance. These commenters suggested that

regulations authorize scholars to receive four years of assistance per

grant, thereby enabling individuals to receive additional assistance

under subsequent grants.

Discussion: We agree that the 4-year limit on assistance under

Sec. 304.22(c) of the proposed regulations should be amended. The

proposed limit was viewed as a reasonable period for individuals to

obtain their degree. It was not, however, intended to preclude scholars

from receiving assistance under subsequent grants when pursuing

additional degrees or training (e.g., doctoral training). We believe

that the best way to address the commenters' concerns is to eliminate

the provision in the proposed regulations that would have established

the limit. By not imposing a specific time limit on scholarship

assistance (and eliminating the need for the exceptions to the time

limit as set out in proposed paragraph (c)), scholars, in effect, will

be authorized to receive financial assistance for the same period as

that which applies to the grant. For example, an individual can receive

up to 5 years of assistance under a 5-year training grant provided the

remaining regulatory requirements are satisfied, including the

requirement in Sec. 304.22(b) that the level of assistance not exceed

the difference between the student's cost of attendance and the amount

of student financial aid the scholar receives. Scholars may also

receive assistance under subsequent grants in order to obtain

additional training (e.g., doctoral, postdoctoral training).

Changes: Paragraph (c), including the 4-year limit on financial

assistance, in this section of the proposed regulations has been

removed from the final regulations.

Section 304.23 What Assurances Must be Provided by a Grantee That

Intends to Provide Scholarships?

Comments: Several commenters requested that the length of a

scholar's service obligation be proportional to the amount of financial

assistance received. Other commenters requested that the regulations

not apply to post-doctoral students.

Most comments on this section questioned the service obligation

requirements in the proposed regulations, particularly the proposed

requirement in Sec. 304.23(b)(2) that the majority of the persons to

whom the scholar provides services be children receiving special

education, related, or early intervention services. Some of these

commenters stated that the service obligation provisions would serve to

limit the ability of scholars to work in regular education settings or

prevent special education teachers from being promoted out of the

classroom. Others indicated that the work requirements would negatively

impact teachers in early intervention settings who serve both infants

and toddlers with disabilities and those considered ``at risk of''

developmental delays.

A number of commenters on the service obligation requirements also

requested clarification in the regulations for determining whether an

individual working part-time has fulfilled the applicable service

obligation. Other commenters viewed the work requirements for

leadership personnel as unduly narrow. In addition, some commenters

asked whether individuals could begin fulfilling their service

obligation by working in the IDEA field during their training program.

Some commenters asked that Federal program officials determine the

appropriateness of the employment

[[Page 69141]]

settings in which each former scholar proposes to fulfill his or her

service obligation. Similarly, many commenters sought a much larger

Federal role--and a reduced grantee role--in tracking scholars

following completion of their training programs. Other commenters

recognized the need for grantees to track their former scholars and

sought additional Federal funding to carry out that function. Many were

concerned with the additional time and paperwork burden associated with

tracking that the proposed regulations placed on grantee institutions,

particularly large training universities. Others requested

clarification as to what happens if an institution is unable to locate

a former scholar. Lastly, a number of commenters requested

clarification on how the regulations applied to scholars who do not

complete their training.

Discussion: As explained in the preamble discussion to Sec. 304.3,

the Act bases a scholar's service obligation on the period for which

the individual received financial assistance rather than on the amount

of that assistance. Thus, regardless of the amount of financial

assistance offered to a scholar, the Act requires that the scholar

choose between fulfilling the two-year per year of assistance service

obligation, on the one hand, or paying back the scholarship on the

other. Both the proposed and final regulations reflect these options.

The statute also does not provide a basis for excepting certain

types of scholarships from the work or repay requirements. Thus, a

post-doctoral student, for example, receiving scholarship assistance

from a leadership preparation project funded under section 673(c) of

the Act is required to fulfill the service obligation requirements

specified in Sec. 304.23(b)(3) or repay the scholarship.

We have provided in the final regulations greater flexibility for

purposes of determining whether a scholar's job is sufficiently focused

on serving children with disabilities. Section 304.23(b) of the final

regulations authorizes a scholar to serve in a position in which the

individual spends a majority of his or her time providing special

education, related, or early intervention services. Thus, a former

scholar who provides services under Part B or Part C of IDEA (Part B)

to children with disabilities, would satisfy Sec. 304.23(b)(2) as long

as a majority of his or her students are children with disabilities

receiving Part B or Part C services from the individual

(Sec. 304.23(b)(2)(i)) or the individual expends a majority of his or

her time providing services under Part B or Part C

(Sec. 304.23(b)(2)(ii)).

We believe that it is critical that scholars be required to work

extensively with children with disabilities since the service

obligation requirements in section 673(h) were adopted in response to

the continued shortages of qualified personnel providing special

education, related services, and early intervention services. We also

believe that is critical for personnel providing services under IDEA to

be capable of working with children with disabilities in regular

education settings given the requirement in Part B of IDEA that

children with disabilities be educated, to the maximum extent

appropriate, with nondisabeld children in the regular education

environment. Accordingly, the final regulations permit, as the proposed

regulations would have permitted, a scholar to work with children with

disabilities in the regular education classroom. If the individual's

primary purpose for being in a regular education classroom is to

provide IDEA-related services to children with disabilities, then that

individual would be considered to be providing IDEA services to

children with disabilities during the time the individual is in that

regular education classroom (for purposes of Sec. 304.23(b)(2)(i) or

(b)(2)(ii)), even though one or more nondisabled children may benefit

from that individual working in the classroom. The regulations,

therefore, support the expectation that children with disabilities be

served in the least restrictive environment appropriate to the child.

At the same time, the majority-student or majority-time requirement in

Sec. 304.23(b)(2) ensure that limited IDEA training monies do in fact

benefit the targeted population--children and infants and toddlers with

disabilities.

The final regulations also do not diminish the importance of

regular education teachers being trained to serve children with

disabilities. To the contrary, regular education teachers, and

individuals in regular education training programs, are encouraged to

participate in courses or other aspects of IDEA-funded training

programs. On the other hand, a current regular education teacher who

accepts scholarship assistance under an IDEA personnel training

program, like all other IDEA-funded scholars, must subsequently work in

the special education, related service, or early intervention field (or

payback the scholarship) consistent with the requirements of these

regulations. Because special education teachers, related service and

early intervention service providers, and special education leadership

personnel continue to be in high demand in schools and school districts

across the Nation, directing personnel training funds under IDEA toward

addressing that demand is clearly warranted.

The regulations do not limit a scholar's opportunities for

advancement as long as the position to which the former scholar

advances meets the service obligation requirements in this section. For

example, a former scholar who received training to work with the high-

incidence disability population, subsequently works as a special

education teacher, and then advances into a position as a special

education administrator would continue to meet the requirements in

Sec. 304.23(b)(2) if the majority of students for which the

administrator is responsible are receiving services under either Part B

or C of IDEA. On the other hand, a secondary school principal position,

in which the administrator is responsible for the entire student

population (a majority of which is not disabled) likely would not

qualify as an appropriate work setting under the regulations. Of

course, a former scholar need not work in a qualified setting once the

period of the service obligation has been met or if the individual pays

back the portion of the scholarship that is proportional to the period

for which the service obligation was not completed.

As some commenters noted, a State may serve, through its infant and

toddler program under Part C of the Act, those infants and toddlers in

the State who would be at risk of experiencing substantial

developmental delays without early intervention services. In those

States, these ``at-risk'' infants and toddlers qualify as infants and

toddlers with disabilities and are eligible to receive early

intervention services under Part C. Thus, whether a former scholar of

an early intervention training program who is providing early

intervention services to infants and toddlers with identified

disabilities or developmental delays, and to at-risk infants and

toddlers, would meet the service obligation requirements in this

section of the regulations may depend upon whether the State has

elected to serve at-risk infants and toddlers under Part C of IDEA. If

the State has elected to include the at-risk population under its Part

C program, and the scholar works full-time with that population, then

Sec. 304.23(b)(2) of the regulations would be satisfied. On the other

hand, if the State does not serve at-risk infants and toddlers under

Part C, then the scholar could still satisfy the regulations by serving

mostly Part C-eligible children or spending a majority of his or

[[Page 69142]]

her time providing Part C services to such children under

Sec. 304.23(b)(2)(ii).

Although the critical need for full-time special education, related

service, and early intervention personnel is well-documented, we

recognize that some former scholars may elect, for a variety of

reasons, to work part-time following their training. Thus, we agree

that Sec. 304.23(b)(1)(ii) and (b)(3)(ii) of the proposed regulations

should clarify that part-time employment is authorized. However,

because an individual's service obligation is based on full-time

employment, a part-time worker must still meet the full-time

obligation, by accumulating the periods of part-time work, by the end

of the regulatory time period (i.e., the sum of the number of years

required plus three additional years). For example, a scholar who

received two years of financial assistance would have seven years to

complete a four-year service obligation. If that scholar subsequently

works full-time for an initial two years and half-time for the next

four (i.e., the equivalent of two full-time years), the individual

would meet the service obligation required under this section.

Accordingly, the final regulations authorize individuals to fulfill

their service obligation through employment on a full-time or full-time

equivalent basis. By ``full-time equivalent'' we mean the accumulation

of part-time employment periods to equal full-time employment. What

constitutes ``full-time employment'' is determined by the individual's

employer or the agencies the individual serves, as stated under the

definition of ``full-time'' in Sec. 304.3.

The work requirements in the Act and regulations that apply to

scholarship recipients in leadership training programs enable scholars

to pursue a wide variety of administrative or other leadership

positions related to the provision of services under IDEA. By requiring

leadership program graduates to spend a majority of their time

performing work related to their training, we expect these former

scholars to help address the shortage of qualified supervisory and

policymaking officials, and university faculty, in the special

education, related service, and early intervention fields. As indicated

previously, however, IDEA leadership funds are not intended to pay for

the training of administrators (e.g., principals) who work primarily

with a nondisabled student population (although former scholars can

certainly assume those positions after the period of their service

obligation or by paying back their scholarship). We believe the

proposed regulatory requirements established an appropriate standard

that is sufficiently focused on children with disabilities, yet

provides for limited work in other areas.

We recognize that in some instances individuals may begin, or

already be, working in the special education, related service, or early

intervention fields prior to completing the training program for which

they received scholarship assistance. For example, a current special

education teacher could receive a scholarship to pursue an additional

degree or certificate in special education; or a scholar working toward

a doctorate in a leadership training program may begin teaching in a

university's special education program while completing a dissertation

or other component of a degree. In cases in which a scholarship

recipient is both completing training and working in a job that would

satisfy the service obligation requirements (e.g., the special

education teacher who provides Part B services to a majority of his or

her students), we agree that the regulations should afford some

flexibility to enable individuals to count toward the period of their

service obligation appropriate work performed before the completion of

training. At the same time, it is expected that scholarship recipients

fulfill a service obligation that is sufficiently related to the

training for which assistance was provided. Because some persons may

work in this type of job before completing training, the final

regulations authorize scholars to count toward the period of their

service obligation requirement work that is performed after the

completion of one full-time academic year of training. Of course, the

applicable job must meet the work setting and other requirements in the

regulations, and the individual must fulfill the remaining portion of

the service obligation upon completion of the training.

Assigning responsibility for determining the appropriateness of a

former scholar's work setting to the Department would create additional

burden on scholars and limit the flexibility on grantee institutions

that the Act intentionally provides. Section 673(h) of the Act states

that applicants for IDEA training grants ``will ensure'' that their

scholarship recipients subsequently meet the service obligation

requirements, meaning that the grantee institution is responsible for

determining whether a scholarship recipient has fulfilled his or her

subsequent work obligations under this section of the regulations. The

Act recognizes that the grantee institution is in the best position to

counsel and assist its former scholars in meeting the work

responsibilities that result from receiving an IDEA-funded scholarship.

Moreover, imposing an across-the-board rule for scholarship recipients

to consult the Federal Government regarding the appropriateness of

their work setting would be overly burdensome to scholars. Therefore,

the regulations, consistent with the Act, rely upon the expertise of

the grantee institution to assist its scholar in obtaining an

appropriate job (or jobs) among the many employment options available

to the individual following training.

Statutory intent, as well as the need for program effectiveness and

efficiency, also requires that grantees ensure that their former

scholars fulfill the service obligation requirements in the

regulations. Both the proposed and final regulations are intended to

provide training institutions maximum flexibility to determine, through

the most efficient means possible, the compliance of their scholars

with the applicable statutory and regulatory requirements. Thus, rather

than establishing a specific type of system that grantees must follow,

Sec. 304.23(e) required that grantees establish policies and

procedures, including a ``tracking system,'' to determine the

compliance of their scholars with their service obligations outlined in

the required agreement between each scholar and the grantee. The broad,

flexible language of paragraph (e) was viewed as the least burdensome

means for grantees ``to ensure,'' as the Act requires, that scholarship

recipients fulfill their employment obligations. Nevertheless, the term

``tracking system'' has been removed from the regulations since many

commenters believed that this term suggested a specific and more

complicated procedure than might be necessary for certain institutions

to comply with the Act and regulations. Grantee institutions still

remain responsible for ensuring that their former scholars comply with

the service obligation requirements and for notifying the Department if

a scholar fails to fulfill his or her obligation. Since no specific

type of ``tracking system'' is required, grantees are free to utilize

existing practices at their institution (e.g., alumni office procedures

or university accreditation practices for reporting on the progress and

employment status of former graduates), modify those practices, or

develop new procedures specific to graduates of IDEA training programs.

Regardless of the approach instituted, we expect that the costs

incurred under Sec. 304.23(e) will be primarily the initial costs of

establishing the institution's policies and procedures for following

former scholars.

[[Page 69143]]

The estimates of the time and paperwork burden associated with

implementing Sec. 304.23(e) were developed following a review of the

history of IDEA training programs and available data, including the

number of scholarships awarded by funded projects. We agree that the

relevant burden could depend on the size of the institution and the

number of scholars. It is more likely, however, that the time and

effort needed to follow former scholars will depend upon the

institutions' existing practices and whether those institutions

receiving IDEA training grants can adopt or modify those practices for

purposes of fulfilling their responsibilities under Sec. 304.23 and

other provisions of these regulations. Moreover, the Department intends

to closely monitor the impact of the requirements of this section on

funded projects and to provide technical assistance (e.g., sharing

model procedures of other projects) during the continued implementation

of Sec. 304.23 and of the final regulations as a whole. Aside from the

fact that the Act compels grantee institutions to ensure their

scholars' compliance, we also note that the grantee's procedures for

following former scholars will provide the institution with valuable

evaluative information related to the success of its training program

and the progress of its graduates.

We do recognize, however, that in some instances, an institution

may be unable to locate a former scholar regardless of its persistency

in doing so. If, for example, the institution has sent the scholar a

letter of inquiry and follow-up reminders without receiving any

response, and it cannot otherwise verify that the former scholar has

met the service obligation requirements, then the institution must

notify the Department of the individual's possible noncompliance.

We note that the regulations apply to training program drop-outs in

the same manner as other scholarship recipients. Thus, an individual

receiving financial assistance under an IDEA-funded grant who fails to

satisfy the service obligation must repay the cost of the assistance

consistent with Sec. 304.23(c). We expect that grant applicants,

however, will minimize the number of students who do not complete their

training by accepting, and limiting scholarship assistance to, highly-

qualified students able to sustain satisfactory performance and

complete their program of studies. In addition, grantee institutions

should establish sufficient support services to ensure the success of

their students. We also note that drop-outs who had received

scholarship assistance would not be able to meet their service

obligation (and, therefore, must payback their scholarship) if they are

not qualified to fill available special education, related service, or

early intervention jobs that meet the requirements in Sec. 304.23(b)(2)

or (b)(3)(i).

Changes: Section 304.23(b)(1)(iii) and (b)(3)(iii) have been

revised to clarify that the length of an individual's service

obligation is based on the number of ``academic years'' for which

scholarship assistance was received. Also, Sec. 304.23(b)(2) has been

revised to authorize scholars to work in positions in which the

individual spends a majority of his or her time providing special

education, related, or early intervention services. In addition, a new

paragraph, Sec. 304.23(b)(5), has been added to the final regulations

to allow scholars to count toward their service obligation employment

that meets the regulatory requirements and is performed subsequent to

the completion of one academic year of the training. Finally,

Sec. 304.23(e) of the proposed regulations has been amended by removing

the term ``tracking system'' as a required component of the grantee's

policies and procedures for determining the compliance of scholars with

their regulatory obligations.

Section 304.30 What are the Requirements for Scholars?

Comments: A number of commenters asked that the regulations

highlight the need for scholars to provide information to the grantee

institution following training, including changes in address and the

status of the individual's employment. These commenters emphasized the

importance of former scholars providing this information in order for

institutions to ensure that the service obligation requirements are

being fulfilled.

Discussion: Although the statute requires that grantees ensure that

their scholarship recipients fulfill their service obligation, we

recognize that scholars have a responsibility to keep their

institutions informed of their whereabouts and their progress toward

meeting the work requirements in Sec. 304.23(b). Scholars, therefore,

are expected to provide any information the institution requests that

is needed to determine whether the scholar has fulfilled the service

obligation requirements or needs to repay the scholarship. Moreover,

scholars should keep their institution apprised of changes in address

or job status throughout the period of their service obligation,

enabling institutions to keep track of their former scholars more

readily.

Changes: Section 304.30(f) of the proposed regulations has been

amended to require that a scholar provide his or her training

institution with any requested information that is necessary for the

grantee to determine the scholar's progress in meeting the service

obligation requirements. Also, under Sec. 304.30, a new paragraph (g)

has been added to the final regulations to require that each scholar

notify the grantee institution of changes in address, employment

setting, or employment status during the period of the service

obligation.

Section 304.31 What are the Requirements for Obtaining a Deferral or

Exemption to Performance or Repayment Under an Agreement?

Comments: Some commenters requested that deferral of the service

obligation requirements be authorized for scholars who are pregnant or

have other temporary medical conditions.

Discussion: We do not believe that expanding the bases for

receiving a deferral of the service obligation requirements is needed.

As in the proposed regulations, Sec. 304.23(b) of the final regulations

provides for an additional three years, beyond the number of years

required by the Act, to complete the service obligation. Thus, a

scholar with a four-year service obligation, for example, has seven

years to fulfill that requirement. The additional three-year time

period in the regulations is intended to provide greater flexibility in

meeting the work obligation for those former scholars who become

pregnant, experience short-term illness, relocate, or, for other

reasons, choose not to work full-time or in successive years. In

addition, Sec. 304.31(b) of the regulations authorizes scholars to

obtain a deferral of the service obligation time period (i.e., number

of years required plus three additional years) under different types of

circumstances, including the situation where a disability prevents an

individual from working. Thus, a disabling medical condition may

provide a basis for a deferral.

Changes: None.

Executive Order 12866

We have reviewed these final regulations in accordance with

Executive Order 12866. Under the terms of the order we have assessed

the potential costs and benefits of this regulatory action.

The potential costs associated with the final regulations are those

resulting from statutory requirements and those

[[Page 69144]]

we have determined to be necessary for administering this program

effectively and efficiently.

In assessing the potential costs and benefits--both quantitative

and qualitative--of these final regulations, we have determined that

the benefits of the regulations justify the costs.

We have also determined that this regulatory action does not unduly

interfere with State, local, and tribal governments in the exercise of

their governmental functions.

We summarized the potential costs and benefits of these final

regulations in the preamble to the NPRM published on July 10, 1998 (63

FR 37469).

Paperwork Reduction Act of 1995

The Paperwork Reduction Act of 1995 does not require you to respond

to a collection of information unless it displays a valid OMB control

number. We display the valid OMB control number assigned to the

collection of information in these final regulations at the end of the

affected sections of the regulations.

Intergovernmental Review

This 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, we intend this document to provide

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

this program.

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, as well as all other Department of

Education documents published in the Federal Register, in text or Adobe

Portable Document Format (PDF) on the Internet 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 (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 Number 84.325, Personnel

Preparation to Improve Services and Results for Children with

Disabilities.)

List of Subjects in 34 CFR Part 304

Education of individuals with disabilities, Elementary and

secondary education, Grant programs--education, Individuals with

disabilities, Reporting and recordkeeping requirements, Schools.

Dated: December 6, 1999.

Judith E. Heumann,

Assistant Secretary for Special Education and Rehabilitative Services.

For the reasons discussed in the preamble, the Secretary amends

Title 34 of the Code of Federal Regulations by revising Part 304 to

read as follows:

PART 304--SPECIAL EDUCATION--PERSONNEL PREPARATION TO IMPROVE

SERVICES AND RESULTS FOR CHILDREN WITH DISABILITIES

Subpart A--General

Sec.

304.1 Purpose.

304.2 What is the Special Education--Personnel Preparation to

Improve Services and Results for Children with Disabilities Program?

304.3 What definitions apply to this program?

304.4 What regulations apply to this program?

Subpart B--What Conditions Must Be Met By the Grantee?

304.20 What are the requirements for directing grant funds?

304.21 What are allowable costs?

304.22 What are the requirements for grantees in disbursing

scholarships?

304.23 What assurances must be provided by a grantee that intends

to provide scholarships?

Subpart C--What Conditions Must Be Met By the Scholar?

304.30 What are the requirements for scholars?

304.31 What are the requirements for obtaining a deferral or

exception to performance or repayment under an agreement?

304.32 What are the consequences of a scholar's failure to meet the

terms and conditions of a scholarship agreement?

Authority: 20 U.S.C. 1473, unless otherwise noted.

Subpart A--General

Sec. 304.1 Purpose.

Individuals who receive scholarship assistance from projects funded

under the Special Education--Personnel Preparation to Improve Services

and Results for Children with Disabilities program are required to

complete a service obligation, or repay all or part of the costs of

such assistance, in accordance with section 673(h) of the Individuals

with Disabilities Education Act and the regulations of this part.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.2 What is the Special Education--Personnel Preparation to

Improve Services and Results for Children with Disabilities Program?

The Special Education--Personnel Preparation to Improve Services

and Results for Children with Disabilities Program (program) provides

financial assistance under section 673 of the Act to--

(a) Help address State-identified needs for qualified personnel in

special education, related services, early intervention, and regular

education, to work with children with disabilities; and

(b) Ensure that those personnel have the skills and knowledge,

derived from practices that have been determined, through research and

experience, to be successful, that are needed to serve those children.

(Authority: 20 U.S.C. 1473(a))

Sec. 304.3 What definitions apply to this program?

(a) Definitions in EDGAR. The following terms used in this part are

defined in 34 CFR 77.1:

Applicant

Award

Department

EDGAR

Grantee

Project

Recipient

Secretary

(b) The following definitions apply to this program:

Academic year means--

[[Page 69145]]

(1) A full-time course of study--

(i) Taken for a period totaling at least nine months; or

(ii) Taken for the equivalent of at least two semesters, two

trimesters, or three quarters; or

(2) For a part-time student, the accumulation of periods of part-

time courses of study that is equivalent to an ``academic year'' under

paragraph (b)(1) of this section.

Act means the Individuals with Disabilities Education Act, 20

U.S.C. 1400 et seq.

Early intervention services means early intervention services as

defined in section 632(4) of the Act.

Full-time, for purposes of determining whether an individual is

employed full-time in accordance with Sec. 304.23, means a full-time

position as defined by the individual's employer or by the agencies

served by the individual.

Payback means monetary repayment of scholarship assistance in lieu

of completion of a service obligation.

Related services means related services as defined in section

602(22) of the Act.

Scholar means an individual who is pursuing a degree, license,

endorsement, or certification related to special education, related

services, or early intervention services and who receives scholarship

assistance under this part.

Scholarship means financial assistance to a scholar for training

under the program and includes all disbursements or credits for

tuition, fees, student stipends, and books, and travel in conjunction

with training assignments.

Service obligation means a scholar's employment obligation, as

described in section 673(h) of the Act and Sec. 304.23(b).

Special education means special education as defined in section

602(25) of the Act.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.4 What regulations apply to this program?

The following regulations apply to this program:

(a) The Education Department General Administrative Regulations

(EDGAR) in the following parts of title 34 of the Code of Federal

Regulations:

(1) Part 74 (Administration of Grants to Institutions of Higher

Education, Hospitals, and Nonprofit Organizations).

(2) Part 75 (Direct Grant Programs).

(3) Part 77 (Definitions That Apply to Department Regulations).

(4) Part 79 (Intergovernmental Review of Department of Education

Programs and Activities).

(5) Part 80 (Uniform Administrative Requirements for Grants and

Cooperative Agreements to State and Local Governments).

(6) Part 81 (General Education Provisions Act--Enforcement).

(7) Part 82 (New Restrictions on Lobbying).

(8) Part 85 (Governmentwide Debarment and Suspension

(Nonprocurement) and Governmentwide Requirements for Drug-Free

Workplace (Grants)).

(9) Part 86 (Drug-Free Schools and Campuses).

(10) Part 97 (Protection of Human Subjects).

(11) Part 98 (Student Rights in Research, Experimental Programs and

Testing).

(12) Part 99 (Family Educational Rights and Privacy).

(b) The regulations in this part 304.

(Authority: 20 U.S.C. 1473; 20 U.S.C. 3474(a))

Subpart B--What Conditions Must Be Met By the Grantee?

Sec. 304.20 What are the requirements for directing grant funds?

(a) The Secretary, as appropriate, identifies in a notice published

in the Federal Register, the percentage (up to 75 percent) of a total

award under the program that must be used to support scholarships as

defined in Sec. 304.3.

(b) The Secretary may award a grant that uses a percentage for

scholarships, as determined by the Secretary, that is lower than that

published under paragraph (a) of this section in exceptional

circumstances if the Secretary determines that such an exception is

necessary to achieve the purposes of the program.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.21 What are allowable costs?

In addition to the allowable costs established in the Education

Department General Administrative Regulations in 34 CFR 75.530 through

75.562, the following items are allowable expenditures by projects

funded under the program:

(a) Tuition and fees.

(b) Student stipends and books.

(c) Travel in conjunction with training assignments.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.22 What are the requirements for grantees in disbursing

scholarships?

Before disbursement of scholarship assistance to an individual, a

grantee must--

(a) Ensure that the scholar--

(1) Is a citizen or national of the United States;

(2) Is a permanent resident of--

(i) Puerto Rico, the United States Virgin Islands, Guam, American

Samoa, or the Commonwealth of the Northern Mariana Islands; or

(ii) The Republic of the Marshall Islands, the Federated States of

Micronesia, or the Republic of Palau (during the period in which these

entities are eligible to receive an award under the program); or

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

Service that the individual is--

(i) A lawful permanent resident of the United States; or

(ii) In the United States for other than a temporary purpose with

the intention of becoming a citizen or permanent resident.

(b) Limit scholarship assistance to the amount by which the

individual's cost of attendance at the institution exceeds the amount

of grant assistance the scholar is to receive for the same academic

year under Title IV of the Higher Education Act; and

(c) Obtain a Certification of Eligibility for Federal Assistance

from each scholar, as prescribed in 34 CFR 75.60, 75.61, and 75.62.

(Approved by the Office of Management and Budget under control

number 1820-0622)

(Authority: 20 U.S.C. 1473)

Sec. 304.23 What assurances must be provided by a grantee that intends

to provide scholarships?

Before receiving an award, a grantee that intends to grant

scholarships under the program must assure that the following

requirements will be satisfied:

(a) Requirement for agreement. Each scholar who will receive a

scholarship must first enter into a written agreement with the grantee

that contains the terms and conditions required by this section.

(b) Terms of the agreement. Each agreement under paragraph (a) of

this section must contain, at a minimum, the following provisions:

(1) Individuals who receive scholarship assistance from projects

funded under section 673(b) and (e), and to the extent determined

appropriate by the Secretary, section 673(d), of the Act will

subsequently maintain employment--

(i) In which the individual provides special education or related

services to children with disabilities or early intervention services

to infants and toddlers, and their families;

(ii) On a full-time or full-time equivalent basis; and

(iii) For a period of at least two years for every academic year

for which assistance was received.

(2) In order to meet the requirements of paragraph (b)(1) of this

section, an

[[Page 69146]]

individual must be employed in a position in which--

(i) A majority of the persons to whom the individual provides

services are receiving from the individual special education, related

services, or early intervention services; or

(ii) The individual spends a majority of his or her time providing

special education or related services to children with disabilities or

early intervention services to infants and toddlers with disabilities.

(3) Individuals who receive scholarship assistance from a

leadership preparation project funded under section 673(c) of the Act

will subsequently maintain employment--

(i) In which the individual expends a majority of his or her time

performing work related to the individual's preparation;

(ii) On a full-time or full-time equivalent basis; and

(iii) For a period of at least two years for every academic year

for which assistance was received.

(4) A scholarship recipient must complete the service obligation

under paragraph (b)(1)(iii) or (b)(3)(iii) of this section within the

period ending not more than the sum of the number of years required in

paragraph (b)(1)(iii) or (b)(3)(iii) of this section, as appropriate,

plus three additional years, from the date the recipient completes the

training for which the scholarship assistance was awarded.

(5) Employment that meets the requirements of paragraph (b) of this

section, and is performed by a scholar subsequent to the completion of

one academic year of the training for which the scholarship assistance

was received, can be used to meet, in part, the period of the scholar's

service obligation under paragraph (b)(1)(iii) or (b)(3)(iii) of this

section.

(6) The service obligation in paragraph (b) of this section, as

applied to a part-time scholar, is based on the accumulated academic

years of training for which the scholarship is received.

(c) Repayment. (1) Subject to the provisions in Sec. 304.31

regarding a deferral or exception, a scholar who does not fulfill the

requirements in paragraph (b)(1) or (b)(3) of this section, as

appropriate, must repay all or part of any scholarship received, plus

interest.

(2) The amount of the scholarship that has not been retired through

eligible service will constitute a debt owed to the United States

that--

(i) Will be repaid by the scholar in accordance with Sec. 304.32;

and

(ii) May be collected by the Secretary in accordance with 34 CFR

part 30, in the case of the scholar's failure to meet the obligation of

Sec. 304.32.

(d) Standards for satisfactory progress. The grantee must

establish, notify students of, and apply reasonable standards for

measuring whether a scholar is maintaining satisfactory progress in the

scholar's course of study;

(e) Compliance. The grantee must establish policies and procedures

to determine compliance of scholars with the terms of the written

agreement developed under this section;

(f) Exit certification. The grantee must establish policies and

procedures for receiving written certification from scholars at the

time of exit from the program that identifies--

(1) The number of years the scholar needs to work to satisfy the

work requirements in paragraph (b) of this section.

(2) The total amount of scholarship assistance received subject to

the work-or-repay provision in paragraph (b) of this section.

(3) The time period, consistent with paragraph (b)(1)(iii) or

(b)(3)(iii) of this section, during which the scholar must satisfy the

work requirements in paragraph (b) of this section.

(4) All other obligations of the scholar under this section.

(g) Information. The grantee must provide, upon request of the

Secretary, information, including records maintained under paragraphs

(e) and (f) of this section, that is necessary to carry out the

Secretary's functions under this part.

(h) Records. The grantee must maintain the information under this

section related to a scholar for a period of time equal to the time

required to fulfill the obligation under paragraph (b) of this section.

(i) Notification. The grantee must inform the Secretary if a

scholar fails to fulfill or chooses not to fulfill the obligation under

paragraph (b)(1) or (b)(3) of this section.

(Approved by the Office of Management and Budget under control

number 1820-0622)

(Authority: 20 U.S.C. 1473(h))

Subpart C--What Conditions Must Be Met By the Scholar?

Sec. 304.30 What are the requirements for scholars?

A scholar must--

(a) Be enrolled in a course of study leading to a degree,

certificate, endorsement, or license related to special education,

related services, or early intervention services in order to be

eligible to receive a scholarship under the program;

(b) Enter into a written agreement with the grantee that meets the

terms and conditions of Sec. 304.23 of this part before starting

training;

(c) Receive the training at the educational institution or agency

designated in the scholarship;

(d) Not accept payment of educational allowances from any other

entity if that allowance conflicts with the scholar's obligation under

this part;

(e) Maintain satisfactory progress toward the degree, certificate,

endorsement, or license as determined by the grantee;

(f) Provide the grantee all requested information necessary to

determine the scholar's progress in meeting the service obligation

under Sec. 304.23(b); and

(g) Notify the grantee of changes in address, employment setting,

or employment status during the period of the scholar's service

obligation under Sec. 304.23(b).

(Approved by the Office of Management and Budget under control

number 1820-0622)

(Authority: 20 U.S.C. 1473(h))

Sec. 304.31 What are the requirements for obtaining a deferral or

exception to performance or repayment under an agreement?

(a) An exception to the repayment requirement in Sec. 304.23(c) may

be granted, in whole or part, if the scholar--

(1) Is unable to continue the course of study or perform the

service obligation because of a disability that is expected to continue

indefinitely; or

(2) Has died.

(b) Deferral of the repayment requirement in Sec. 304.23(c) may be

granted during the time the scholar--

(1) Is engaging in a full-time course of study at an institution of

higher education;

(2) Is serving, not in excess of three years, on active duty as a

member of the armed services of the United States;

(3) Is serving as a volunteer under the Peace Corps Act;

(4) Is serving as a full-time volunteer under Title I of the

Domestic Volunteer Service Act of 1973;

(5) Has a disability which prevents the individual from working,

for a period not to exceed three years; or

(6) Is unable to secure employment as required by the agreement by

reason of the care provided to a disabled family member for a period

not to exceed 12 months.

(c) Deferrals or exceptions to performance or repayment may be

provided by grantees based upon sufficient evidence to substantiate the

grounds for an exception under paragraph (a) of this section or a

deferral under paragraph (b) of this section.

(Approved by the Office of Management and Budget under control

number 1820-0622)

[[Page 69147]]

(Authority: 20 U.S.C. 1473(h))

Sec. 304.32 What are the consequences of a scholar's failure to meet

the terms and conditions of a scholarship agreement?

If a scholar fails to meet the terms and conditions of a

scholarship agreement under Sec. 304.23(b) or to obtain a deferral or

an exception as provided in Sec. 304.31, the scholar must repay all or

part of the scholarship assistance to the Secretary as follows:

(a) Amount. The amount of the scholarship to be repaid is

proportional to the service obligation not completed.

(b) Interest Rate. The Secretary charges the scholar interest on

the unpaid balance owed in accordance with 31 U.S.C. 3717.

(c) Interest accrual. (1) Interest on the unpaid balance accrues

from the date the scholar is determined to have entered repayment

status under paragraph (e) of this section.

(2) Any accrued interest is capitalized at the time the scholar's

repayment schedule is established.

(3) No interest is charged for the period of time during which

repayment has been deferred under Sec. 304.31.

(d) Collection costs. Under the authority of 31 U.S.C. 3717, the

Secretary may impose reasonable collection costs.

(e) Repayment status. A scholar enters repayment status on the

first day of the first calendar month after the earliest of the

following dates, as applicable:

(1) The date the scholar informs the grantee that he or she does

not plan to fulfill the service obligation under the agreement.

(2) Any date when the scholar's failure to begin or maintain

employment makes it impossible for that individual to complete the

service obligation within the number of years required in

Sec. 304.23(b).

(3) Any date on which the scholar discontinues enrollment in the

course of study under Sec. 304.30(a).

(f) Amounts and frequency of payment. The scholar must make

payments to the Secretary that cover principal, interest, and

collection costs according to a schedule established by the Secretary.

(Approved by the Office of Management and Budget under control

number 1820-0622)

(Authority: 20 U.S.C. 1473(h))

[FR Doc. 99-31951 Filed 12-8-99; 8:45 am]

BILLING CODE 4000-01-U