General and Non-Loan Programmatic Issues

DEPARTMENT OF EDUCATION

[Docket ID ED-2009-OPE-0005]

34 CFR Parts 600, 668, 675, 686, 690, and 692

RIN 1840-AC99

General and Non-Loan Programmatic Issues

AGENCY:

Office of Postsecondary Education, Department of Education.

ACTION:

Final regulations.

SUMMARY:

The Secretary amends the regulations for Institutional Eligibility Under the Higher Education Act of 1965, the Student Assistance General Provisions, the Federal Work-Study (FWS) Programs, the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program, the Federal Pell Grant Program, and the Leveraging Educational Assistance Partnership Program (LEAP) to implement various general and non-loan provisions of the Higher Education Act of 1965 (HEA), as amended by the Higher Education Opportunity Act of 2008 (HEOA) and other recently enacted legislation.

DATES:

Effective Date:

These regulations are effective July 1, 2010.

Implementation date:

The Secretary has determined, in accordance with section 482(c)(2)(A) of the HEA, that institutions may, at their discretion, choose to implement the new and amended provisions of §§ 600.32(d), 668.28, 668.23(d)(4), 668.43, 675.16, 675.18(g), 675.18(i), 686.41, and 686.42 on or after November 1, 2009. For further information, see the section entitled

Implementation Date of These Regulations

in the

SUPPLEMENTARY INFORMATION

section of this preamble.

FOR FURTHER INFORMATION CONTACT:

For general information or information regarding these regulations related to the non-title IV revenue requirement (90/10), John Kolotos. Telephone: (202) 502-7762 or via the Internet at:

John.Kolotos@ed.gov

.

For information related to all Federal Pell Grant Program issues and the LEAP/GAP Program, Fred Sellers and Jacquelyn Butler. Telephone: (202) 502-7502 and (202) 502-7890, respectively or via the Internet at:

Fred.Sellers@ed.gov

or

Jacquelyn.Butler@ed.gov

.

For information related to the provisions for readmission for servicemembers, teach-outs, peer-to-peer file sharing, baccalaureate in liberal arts, and institutional plans for improving the academic program, Wendy Macias. Telephone: (202) 502-7526 or via the Internet at:

Wendy.Macias@ed.gov

.

For information related to all FWS Program issues, Nikki Harris and Harold McCullough. Telephone: (202) 219-7050 and (202) 377-4030, respectively, or via the Internet at

Nikki.Harris@ed.gov

or

Harold.McCullough@ed.gov

.

For information related to the provisions for fire safety standards, missing students procedures, hate crime reporting, emergency response and evacuation, and students with intellectual disabilities, Jessica Finkel. Telephone: (202) 502-7647 or via the Internet at:

Jessica.Finkel@ed.gov

.

For information related to the provisions for extenuating circumstances under the TEACH Grant Program, Jacquelyn Butler. Telephone: (202) 502-7890 or via the Internet at:

Jacquelyn.Butler@ed.gov

.

For information related to the consumer information requirements, Brian Kerrigan.

Telephone:

(202) 219-7058 or via the Internet at:

Brian.Kerrigan@ed.gov

.

If you use a telecommunications device for the deaf (TDD), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

Individuals with disabilities can obtain this document in an accessible format (

e.g.

, braille, large print, audiotape, or computer diskette) on request to one of the contact persons listed under

FOR FURTHER INFORMATION CONTACT

.

SUPPLEMENTARY INFORMATION:

On August 21, 2009, the Secretary published a notice of proposed rulemaking (NPRM) for general and non-loan programmatic issues in the

Federal Register

(74 FR 42380).

In the preamble to the NPRM, the Secretary discussed on pages 42383 through 42415 the major regulations proposed in that document to implement provisions of the HEOA, including the following:

• Amending §§ 690.63(h), 690.64, and 690.67 to establish the conditions under which students may receive up to two Federal Pell Grant Scheduled Awards during a single award year.

• Amending §§ 686.12(c), 686.41, and 686.42(c) to establish the extenuating circumstances under which a TEACH Grant recipient may be excused from fulfilling all or part of his or her service obligation.

• Amending § 675.18(g) to permit institutions to use FWS funds to compensate students employed in projects that teach civics in school, raise awareness of government functions or resources, or increase civic participation.

• Amending § 675.18 by adding paragraph (i) to allow institutions located in major disaster areas to make FWS payments to disaster-affected students.

• Amending §§ 675.41 and 675.43 to revise definitions and terms relating to work colleges.

• Adding § 668.28 to establish the requirement that proprietary institutions derive at least 10 percent of their revenue from sources other than Title IV, HEA program funds and specify how institutions calculate the revenue percentage.

• Amending § 668.41(a) and (d) and § 668.45 to expand the information that institutions must make available to prospective and enrolled students to include information on: the employment and placement of students; the retention rates of first-time, full-time undergraduate students; the placement rate for any program offered by the institution, if the institution calculates this rate; and the completion and graduation rate data that is disaggregated by gender, race, and grant or loan assistance.

• Amending § 668.41(e) to provide that institutions that maintain on-campus housing facilities must publish annually a fire safety report, maintain a fire log, and report fire statistics to the Department.

• Amending § 668.46 by adding paragraph (h) to require institutions that provide on-campus housing facilities to develop and make available a missing student notification policy and allow students who reside on campus to confidentially register contact information.

• Amending § 668.46(c) to expand the list of crimes that institutions must include in the hate crimes statistics reported to the Department.

• Amending § 668.46 by adding paragraph (g) to require institutions to include in their annual security report a statement of emergency response and evacuation procedures.

• Adding subpart O to 34 CFR part 668, to specify the conditions under which students with intellectual disabilities may receive Federal Pell Grant, FWS, and FSEOG Program funds.

• Adding § 668.18 to establish requirements under which an institution must readmit servicemembers to the same academic status they had when they last attended the institution.

• Amending § 600.32(d) to provide that an institution that conducts a teach-out at a site of a closed institution may,

under certain conditions, establish that site as an additional location.

• Amending § 600.5(a) and (e) to include in the definition of “proprietary institution of higher education” an institution that provides a program leading to a baccalaureate degree in liberal arts, if the institution provided that program since January 1, 2009, and has been accredited by a regional accrediting agency since October 1, 2007, or earlier.

• Amending § 668.14(b) to provide that an institution must have developed and implemented written plans to effectively combat unauthorized distribution of copyrighted material and that the institution will offer alternatives to illegal downloading or peer-to-peer distribution of intellectual property.

• Amending § 668.43(a) to include, as part of the information an institution must make available to prospective and enrolled students, a description of any plans the institution has to improve its academic program.

• Amending § 692.10(b) to provide that the non-Federal share of student grants or work-study jobs under the LEAP Program must be State funds and that the non-Federal share no longer has to come from a direct appropriation of State funds.

• Amending § 692.21(k) to provide that the State program must notify students that grants are LEAP Grants that are funded by the Federal Government, the State, and, for LEAP Grants to students under the new Grants for Access and Persistence (GAP) Program, other contributing partners.

• Adding subpart C to 34 CFR part 692 to establish the activities, awards, allotments to States, matching funds requirements, consumer information requirements, application requirements, and other requirements needed to begin and continue participating in the GAP Program.

Technical Amendments

In addition to the changes necessary to implement provisions of the HEOA, these final regulations also incorporate technical amendments made to the HEA by The Higher Education Technical Corrections (Pub. L. 111-39), enacted on July 1, 2009. These changes are as follows: In § 690.75(e) we proposed that a student whose parent was in the Armed Forces and died in Iraq or Afghanistan could receive the maximum Federal Pell Grant eligibility if the student was under 24 years old or enrolled in an institution of higher education at the time the parent died, in accordance with section 401(f)(4) of the HEA, as amended by the HEOA. However, Public Law 111-39 removed section 401(f)(4) from the HEA and added new sections 473(b) and 420R effective July 1, 2009. Section 401(f)(4) provided that, for purposes of Federal Pell Grants only, a student was deemed to have an expected family contribution (EFC) of zero if the student's parent was in the Armed Forces and died in Iraq or Afghanistan when the student was under 24 years old or enrolled in an institution of higher education at the time the parent died.

Section 473(b) was added to Part F—Need Analysis of the HEA and provides that, beginning with the 2009-2010 and succeeding award years, each student with a Federal Pell Grant-eligible EFC whose parent or guardian was a member of the Armed Forces of the United States and died as a result of performing military service in Iraq or Afghanistan after September 11, 2001, will be determined to have an EFC of zero that will generally apply to all Title IV, HEA programs. Because part F of the HEA, where these changes are reflected, is subject to section 478(a) of the HEA, which generally prohibits regulating the requirements in part F, we are removing proposed § 690.75(e).

Section 420R of the HEA establishes a new, non-need-based program called the Iraq and Afghanistan Service Grants Program (IASG Program) starting in the 2010-2011 award year. To qualify for an IASG, a student must have a parent or guardian who died as a result of military service in Iraq or Afghanistan after September 11, 2001, and must be, at the time of the parent or guardian's death, less than 24 years of age or enrolled at an institution of higher education. A qualifying student who is not eligible for a Federal Pell Grant would be eligible to receive an IASG that is the same amount as a maximum Federal Pell Grant to assist in paying the student's cost of attendance at an institution of higher education. Grants under the IASG Program may not exceed the student's cost of attendance, and payments are adjusted like Federal Pell Grants if the student is enrolled less than full-time; unlike Federal Pell Grants, IASG Program grants are not considered to be estimated financial assistance. Under this program, the student's EFC will not be changed as a result of a parent or guardian's service. Regulations are necessary to implement this Title IV, HEA program. However, section 409 of Public Law 111-39 waives the provisions of sections 482 and 492 of the HEA concerning the master calendar for regulatory effective dates and the requirement to use negotiated rulemaking to formulate regulations for the IASG Program. We, therefore, expect to initiate the regulatory process without negotiated rulemaking and adopt the necessary regulations that would be effective on July 1, 2010, for the 2010-2011 award year.

• Section 401(a)(6) of Public Law 111-39 also amended section 415E(b)(1)(B) of the HEA governing allotments to States under the Grants for Access and Persistence Program (GAP). The allotment formula provides that a State with a prior year allotment shall receive not less than that amount in the next year's allotment. The HEA provides that, if a State received an allotment for 2010-2011 under 34 CFR part 692, subpart B, the Special Leveraging Educational Assistance Partnership Program (SLEAP), the State's 2011-2012 allotment for the GAP Program shall not be less than its 2010-2011 SLEAP allotment. We are revising § 692.110(a) to reflect this statutory change. We are also revising appendix A to subpart C of part 692 that provides a case study illustrating the requirements for allotting funds under the GAP Program to reflect these changes to the regulations.

We have also made a number of minor technical corrections and conforming changes. Changes that are statutory or that involve only minor technical corrections are generally not discussed in the

Analysis of Comments and Changes

section.

Waiver of Proposed Rulemaking for Additional Conforming Changes

These final regulations incorporate a statutory change made to the HEA by the HEOA that was not included on Team V's negotiating agenda or in the NPRM published on August 21, 2009. However, this statutory change in section 485(h) of the HEA is referenced in § 602.24 of the Team III (Accreditation) final regulations published in the

Federal Register

as Docket ID ED-2009-OPE-0009. We are amending § 668.43(a) of these regulations to reflect the statutory provisions by adding new paragraph (a)(11).

We are also amending § 690.6 by adding paragraph (e) to reflect a statutory change made by the HEOA to section 401(c)(5) of the HEA. Section 690.6(e) provides that, if a student receives a Federal Pell Grant for the first time on or after July 1, 2008, the student may receive no more than the equivalent of nine Scheduled Awards.

Because these amendments implement changes to the HEA that were not negotiated, we do not discuss them in the

Analysis of Comments and Changes

section.

Under the Administrative Procedure Act (5 U.S.C. 553) (APA), the Department is generally required to publish a notice of proposed rulemaking and provide the public with an opportunity to comment on proposed regulations prior to issuing final regulations. In addition, all Department regulations for programs authorized under title IV of the HEA are subject to the negotiated rulemaking requirements of section 492 of the HEA. However, both the APA and the HEA provide for exemptions from these rulemaking requirements. The APA provides that an agency is not required to conduct notice-and-comment rulemaking when the agency for good cause finds that notice and comment are impracticable, unnecessary, or contrary to the public interest. Similarly, section 492 of the HEA provides that the Secretary is not required to conduct negotiated rulemaking for Title IV, HEA program regulations if the Secretary determines that applying that requirement is impracticable, unnecessary, or contrary to the public interest within the meaning of the HEA.

Although the regulations implementing the HEOA are subject to the APA's notice-and-comment and the HEA's negotiated rulemaking requirements, the Secretary determined that it was unnecessary to conduct negotiated rulemaking or notice-and-comment rulemaking on the changes needed in § 668.43. These changes simply amend the Department's regulations to reflect statutory changes made by the HEOA to paragraph (h) of section 485 of the HEA, and these changes are already effective. The Secretary does not have discretion in whether or how to implement these changes. Accordingly, negotiated rulemaking and notice-and-comment rulemaking are unnecessary.

Implementation Date of These Regulations

Section 482(c) of the HEA requires that regulations affecting programs under title IV of the HEA be published in final form by November 1 prior to the start of the award year (July 1) to which they apply. However, that section also permits the Secretary to designate any regulation as one that an entity subject to the regulation may choose to implement earlier and the conditions under which the entity may implement the provisions early.

Consistent with the intent of this regulatory effort to strengthen and improve the administration of the Title IV, HEA programs, the Secretary is using the authority granted him under section 482(c) of the HEA to designate the following new and amended provisions for early implementation, at the discretion of each institution, lender, guaranty agency, or servicer, as appropriate:

• The closed school teach out provisions in § 600.32(d).

• The readmission requirements for returning servicemembers in § 668.18.

• The 90/10 revenue requirements in §§ 668.28 and 668.23(d)(4).

• The institutional information requirements in § 668.43.

• The FWS provisions in §§ 675.16, 675.18(g), and 675.18(i).

• The teach grant provisions regarding extenuating circumstances in §§ 686.12, 686.41, and 686.42.

In addition, the revisions to §§ 690.63, 690.64, and 690.67 of the Federal Pell Grant Program regulations may apply to the crossover payment period that is in both the 2009-10 and 2010-11 award years,

i.e.,

a payment period that includes June 30, 2010, and July 1, 2010. If an institution does not implement these regulations prior to July 1, 2010, but, prior to July 1, 2010, designates a student's 2010 crossover payment period as being in the 2009-10 award year, the Secretary does not consider these revisions to be applicable to the crossover payment period. Nothing will prevent the institution from subsequently designating the 2010 payment period as being in the 2009-10 award year with the revisions to §§ 690.63, 690.64, and 690.67 then being applicable.

Analysis of Comments and Changes

Except as noted under

Waiver of Proposed Rulemaking for Additional Conforming Changes,

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, the Secretary must obtain public involvement in the development of the proposed regulations. After obtaining advice and recommendations, the Secretary must conduct a negotiated rulemaking process to develop the proposed regulations. The negotiated rulemaking committee did not reach consensus on the proposed regulations that were published on August 21, 2009. The Secretary invited comments on the proposed regulations by September 21, 2009. More than 113 parties submitted comments, a number of which were substantially similar. An analysis of the comments and of the changes in the regulations since publication of the NPRM follows.

We group major issues according to subject, with appropriate sections of the regulations referenced in parentheses. We discuss other substantive issues under the sections of the regulations to which they pertain. Generally, we do not address minor, non-substantive changes, recommended changes that the law does not authorize the Secretary to make, or comments pertaining to operational processes. We also do not address comments pertaining to issues that were not within the scope of the NPRM.

Part 600 Institutional Eligibility Under the Higher Education Act of 1965, as Amended

Definition of Baccalaureate Liberal Arts Programs Offered by Proprietary Institutions (§ 600.5)

Comments:

One commenter supported the proposed change, stating that it was a reasonable way to clarify the term

program leading to a baccalaureate degree in liberal arts.

One commenter stated that the requirement that an institution “has provided that program since January 1, 2009” should be interpreted to mean that any new liberal arts program added from January 1, 2009, forward will qualify an otherwise eligible institution as an eligible proprietary institution, so long as the institution has been accredited by a recognized regional accrediting agency or association since October 1, 2007, or earlier.

Discussion:

The Department does not agree that the requirement that the institution “has provided that program since January 1, 2009” should be interpreted to mean that any new liberal arts program added from January 1, 2009, forward will qualify an otherwise eligible institution as an eligible proprietary institution. Rather, the requirement means that an institution was providing the program (

i.e.,

was enrolling students in the program) on January 1, 2009, and has continued to do so.

Changes:

Section 600.5(a)(5)(i)(B)(

1

) has been revised to clarify that an institution meets the definition of a

proprietary institution of higher education

if, in addition to being accredited by a recognized regional accrediting agency or association continuously since October 1, 2007, it has provided a program leading to a baccalaureate degree in liberal arts continuously since January 1, 2009.

Institutional Requirements for Teach-Outs and Eligibility and Certification Procedures (§§ 600.2, 600.32, 668.14)

Comments:

Several commenters supported the proposed changes. One commenter stated that § 600.32(d) should be expanded to provide that the exemptions from the two-year in existence requirement, the assumption of liabilities, and the assumption of the cohort default rate apply when an institution conducts a teach-out at an institution that closes because a guaranty agency initiated an action to limit, suspend, or terminate (LS&T) the participation of an institution, or took an emergency action against the institution. One commenter explained that a closing can be a very confusing time for students if they were not given accurate information about what was happening at their institution, and urged the Department to monitor closely the process for establishing an additional location under these regulations. The commenter noted that accurate and effective communication to students is especially critical when the teach-out institution is establishing a permanent location at a closed institution. The commenter asserted that an institution establishing a permanent location at the site of a closed institution must be able to provide a teach-out option that meets appropriate quality standards even in cases when the prior institution did not meet these standards. The commenter stated that the mere submission of a teach-out plan should not be viewed as evidence that these standards were met for purposes of the closed school discharge.

Discussion:

LS&T and emergency actions initiated by a guaranty agency against an institution are promptly reported to the Department, and the Department investigates those reports to determine whether to initiate a separate LS&T or emergency action against the institution. Therefore, we do not believe it is necessary to include as a trigger an LS&T or emergency action initiated by a guaranty agency that would provide the two-year requirement, liability, and default rate exemptions to an institution conducting a teach-out at a closed institution. Because of the interplay between the actions taken by a guaranty agency and the Department, there may be some instances when an institution may close prior to the Department initiating an LS&T or emergency action. In other instances, an institution may close precipitously before the Department has time to initiate an appropriate action under the circumstances. To address these instances, the final regulations have been modified so that the action taken by the Department may be initiated after the institution closes. The Department recognizes that a school closure and teach-out can be a confusing time for students, and intends to work closely with the States and accrediting agencies to make sure that students are given accurate information about their options during this transition. The opportunity for another institution to perform the teach-out, and open a permanent location under this exemption, should also ensure that the teach-out is adequately staffed and designed to serve the students that attended the closed school.

Changes:

Section 600.32(d)(1)(i) is revised to clarify that an institution that conducts a teach-out at a site of a closed institution may apply to have that site approved as an additional location if the closed institution ceased operations because the Secretary has taken an LS&T or emergency action, regardless of whether the Secretary took that action before or after the institution closed.

Part 668 Student Assistance General Provisions

Readmission Requirements for Servicemembers (§ 668.18)

Comments:

One commenter supported the proposed regulations, including the proposed requirement limiting the institutional charges that an institution may charge a returning servicemember. Several commenters opposed the proposed requirement limiting the institutional charges that an institution may charge a returning servicemember because they stated it would be administratively and financially burdensome for institutions. For the same reason, some of these commenters also opposed the requirement that an institution waive charges for previously purchased equipment for the first academic year in which the servicemember returns if the returning servicemember is readmitted to the same program for the same reason. Many of these commenters asserted that, because many of the affected servicemembers will receive full tuition and fee benefits under the Post-9/11 GI Bill, charging the returning servicemember the current institutional charges for a program, rather than the same charges that the returning servicemember was or would have been assessed for the academic year during which he or she left the institution, will not penalize the student for having left to serve in the uniform services. One commenter added that this argument is supplemented by the fact that at least one State waives any tuition charges not paid by the GI Bill at public universities. One of these commenters stated that limiting charges to the first year only would create an unrealistic expectation for returning servicemembers for the full cost of the program. A few of the commenters stated that limiting institutional charges for returning servicemembers would be unfair to other students at the institution who would assume higher costs, or noted that the proposed requirement could preempt State requirements.

Several commenters asserted that the forced manual billing determinations that the regulations would require of institutions would be unduly burdensome as the billing software used by most institutions, which uses pre-programmed data, including current year charges, does not accommodate special case situations, such as the proposed regulations would create. Specifically, a few commenters noted that institutions would be forced to maintain multi-faceted data tables over an undetermined number of years to recreate the prior institutional charges for servicemembers who may or may not return, as institutions do not keep student financial records for the entire period covered by the readmission requirements and billing systems are not designed to archive the data necessary to calculate institutional charges years later. The commenters contended that, even if an institution has all the information necessary, recreating the institutional charges would be complicated as institutional charges cover many types of charges involving variations by program. One commenter asserted that some Department of Defense tuition assistance systems, such as GoArmy, do not allow variations in tuition rates and could potentially delay tuition assistance processing for both impacted and nonimpacted servicemembers. A few commenters stated that determining institutional charges for returning servicemembers who may have been admitted, but were not enrolled or attending prior to leaving to serve, would be particularly difficult as they had never incurred specific charges, with one of these commenters noting that their institution has an open admission policy resulting in a large number of these students.

One commenter generally supported the requirement limiting the institutional charges that an institution may charge a returning servicemember, but stated that an institution should be permitted to charge a returning servicemember for new classes when a program has changed, requiring the servicemember to take additional

classes in the form of prerequisites or new requirements. A few commenters noted that requiring an institution to provide, if necessary, refresher courses at no extra cost seemed to preclude an institution from collecting funding from other entities to cover those expenses. One commenter stated that requiring an institution to make reasonable efforts to help the servicemember become prepared to resume the program or to enable the servicemember to complete the program at no extra cost, would impose an undue financial hardship and administrative burden on the institution. The commenter asserted that, when there is only the normal reasonable progression from one year to the next, rather than any actual change to the program in the servicemember's absence, it is the servicemember's responsibility to retain the knowledge attained in the normal course of educational progression. In addition, the commenter stated that the definition of “reasonable efforts” is ambiguous and would be difficult to determine.

Discussion:

The Department believes that the goal of these provisions is to minimize the disruption to the lives of persons performing service in the uniformed services, allowing a servicemember to return to an institution without penalty for having left because of that service. We believe that limiting charges for the year in which the servicemember returns to the charges the servicemember was or would have been assessed for the academic year during which the servicemember left is an important part of this goal, and may necessitate additional efforts by institution as well as the absorption of some costs. However, we agree that this goal would still be achieved if any increase in charges from the amount the servicemember was or would have been assessed for the academic year during which the servicemember left the institution is covered by veterans' or servicemember education benefits. In addition, we believe that requiring institutions to maintain only past tuition and fee charges, rather than requiring them to maintain all institutional charges and waive charges for new equipment required in lieu of equipment previously paid for, will accomplish this goal, while minimizing burden to institutions that may have had difficulty determining the previous institutional charges beyond tuition and fees, as well as difficulty determining which of the current institutional charges beyond tuition and fees would be covered by veterans' and servicemember education benefits. Therefore, for a servicemember who is readmitted to the same program, an institution will be considered to have admitted the servicemember with the same academic status if, for the first academic year in which the servicemember returns, the institution does not increase the tuition and fee charges above the prior amount the servicemember was or would have been assessed for the academic year when the servicemember left the institution, unless there are sufficient veterans' education benefits or other servicemember education benefits to pay the increased amount of those tuition and fee charges. Consider, for example, a servicemember who is readmitted to the same program and was assessed tuition and fee charges of $5,000 for the academic year when the servicemember left the institution. The current tuition and fee charges for the program are $7,000, a $2,000 increase over the charges formerly assessed the student. In addition to the original $5,000 in charges, the institution may charge the readmitted servicemember for any portion of that $2,000 increase that will be covered by veterans' education benefits or other servicemember education benefits. If this student receives $1,000 in veterans' education benefits or other servicemember education benefits for tuition and fees, the institution may assess the student tuition and fee charges of up to $6,000. If the student receives $2,000 or more in veterans' education benefits or other servicemember education benefits for tuition and fees, the institution may assess up to $7,000, the tuition and fee charges for other students admitted to the program for the current academic year. This approach will significantly reduce the burden on institutions to track many of the variable charges that were included in the proposed regulation, and will simplify the determinations of what tuition or fee amounts would be subject to the one-year transition period for a returning servicemember. The portion of tuition and fees that are subject to this temporary restriction may also be reduced or eliminated by other policies set by the institution, or under State law, but the Federal requirement will provide a consistent base line for all institutions in every State and serve the purpose intended by this provision in the law.

We agree that students who are not informed of any increase in tuition and fee charges for subsequent years may have unrealistic expectations of the total cost of the program. We would expect that an institution would actively inform affected servicemembers upon readmission of any subsequent increase and the total expected charges for the program (an institution is required to make this information available at all times and include it in its annual distribution of institutional and financial information to all enrolled students in accordance with § 668.41(c) and (d)). To the extent that this temporary restriction on the amount of tuition and fees for returning servicemembers is a benefit not provided to the other students at an institution, it is provided under the law to ease the transition back to the institution for the returning servicemembers. We also believe that this provision will not create conflicts for benefits provided to other servicemembers under the GoArmy education program.

Although we appreciate that current institutional billing software may not easily accommodate affected servicemembers, we believe that any burden incurred by an institution that must manually process such a student is outweighed by the benefit to the returning servicemember. We also believe that limiting the covered costs to tuition and fees significantly simplifies this provision for institutions.

In accordance with § 668.18(a)(2)(iv), an institution may not charge a returning servicemember for additional classes offered by the institution that are prerequisites for the program. The institution does not have to readmit such a servicemember if the institution can demonstrate that providing the classes at no cost places an undue hardship on the institution. If new classes are required for the program and those classes are taken by the servicemember in the academic year in which he or she returns, the institution may not charge the additional tuition and fees for those programs unless doing so does not increase the tuition and fee charges above the prior amount the student was or would have been assessed for the academic year when he or she left the institution, or there are sufficient veterans' education benefits or other servicemember education benefits to pay the increased amount of those tuition and fee charges. In requiring an institution to provide, if necessary, refresher courses at no extra cost, we did not intend to preclude an institution from collecting funding from other assisting agencies to cover those expenses. Also, we note that any reasonable efforts an institution must make to help the student become prepared to resume the program, or to enable the student to complete the

program must be provided at no extra cost to the student. We do not agree that requiring an institution to make reasonable efforts to help a servicemember become prepared to resume the program or to enable the servicemember to complete the program at no extra cost, would automatically impose an undue financial hardship and administrative burden on the institution, nor do we agree that, in cases where there is only the normal reasonable progression from one year to the next, rather than any actual change to the program in the servicemember's absence, it is the servicemember's responsibility to retain the knowledge attained in the normal course of educational progression. Again, the goal of these provisions is to minimize the disruption to the lives of persons performing service in the uniformed services, allowing a servicemember to return to an institution without penalty for having left because of that service. Holding a servicemember responsible for retaining all knowledge attained through previous attendance of the program would be penalizing the servicemember for having left to serve. “Reasonable efforts” are actions that do not place an undue hardship on an institution. An action places an undue hardship on an institution if it requires significant difficulty or expense to the institution. The mere fact that the readmission of a student will create additional expenses or burden to the institution is not enough for an institution to deny a student readmission. The expenses must be significant when considered in light of the overall financial resources of the institution and the impact otherwise of such action upon the operation of the institution. An institution carries the burden to prove by a preponderance of the evidence that the expense or difficulty of readmitting a student would be significant.

Changes:

Section 668.18(a)(2)(iii)(E) is revised to provide that, for a servicemember who is readmitted to the same program, an institution will be considered to have admitted the servicemember with the same academic status if, for the first academic year in which he or she returns, the institution does not increase the tuition and fee charges above the prior amount the student was or would have been assessed for the academic year when the student left the institution, unless there are sufficient veterans' education benefits or other servicemember education benefits to pay the increased amount of those tuition and fee charges. Proposed § 668.18(a)(2)(iii)(F), which would have required an institution to waive charges for previously purchased equipment, is removed. Section 668.18(a)(2)(iv)(A) has been revised: (1) To make clear that any reasonable efforts an institution must make to help the servicemember become prepared to resume the program, or to enable the servicemember to complete the program must be provided at no extra cost, and (2) to make clear that those efforts must be provided at no extra cost to the student, to permit an institution to collect from other entities for costs associated with making such reasonable efforts. The definition of

undue hardship

in § 668.18(a)(2)(iv)(C)(

2

) is amended to clarify that difficulty and expenses must be significant when considered in light of the overall financial resources of the institution and the impact otherwise of such action on the operation of the institution.

Comments:

One commenter asked what would be required of an institution to “promptly readmit” an affected servicemember if the program to which the servicemember was previously admitted is offered infrequently, or is no longer offered. One commenter asked how long a servicemember may delay readmission to an institution by requesting to be readmitted at a later date, and at what point the institutional charges would be locked in. The commenter also questioned whether the unusual circumstances under which an institution may admit a servicemember at a date later than the next class or classes in the program pertain to the institution or just to the servicemember.

Discussion:

If the program to which the servicemember was previously admitted is no longer offered, § 668.18(a)(2)(iii)(A) requires the institution to admit the servicemember to the program that is most similar to that program, unless the student requests or agrees to admission to a different program. An institution readmits a servicemember “promptly” if, in accordance with § 668.18(a)(2)(ii), the institution readmits the servicemember into the next class or classes in the program beginning after he or she provides notice of his or her intent to re-enroll, unless the servicemember requests a later date of readmission or unusual circumstances require the institution to admit the servicemember at a later date.

These regulations presume that a returning servicemember who provides notice of his or her intent to reenroll at an institution plans to do so soon after providing such notice. The provision that an institution must admit a returning servicemember to the next class or classes in the student's program unless the student requests a later date of admission was included to ensure that an institution could not delay a servicemember's readmission until, for example, the next semester if classes in the student's program were offered during the upcoming semester. However, the regulations do not preclude the returning servicemember from deciding that a later admission date, such as the next semester, is acceptable. No matter when the student actually resumes his or her program, if the returning servicemember is within the window of eligibility in § 668.18(c)(iii), the requirements of this section apply. Thus, for the first academic year in which the servicemember returns, the institution cannot increase the tuition and fee charges above the prior amount the servicemember was or would have been assessed for the academic year when the servicemember left the institution, unless there are sufficient veterans' education benefits or other servicemember education benefits to pay the increased amount of those tuition and fee charges. Unusual circumstances under which an institution may admit a servicemember at a date later than the next class or classes in the program may pertain to the institution or to the servicemember. There are a number of factors an institution may consider when determining whether unusual circumstances require a later date of readmission, such as the length of any necessary retraining or intervening changes in the circumstances of the institution. State laws or requirements (including any local law or ordinance) or institutional requirements that restrict enrollment, due to class size, for example, or otherwise conflict with the requirements of this section are not “unusual circumstances” as such laws and requirements are superseded by the requirements of this section for the initial enrollment period. Institutions should take reasonable steps to resolve such restrictions as soon as possible to come into compliance with those provisions.

Changes:

None.

Non-Title IV Revenue Requirement

Compliance Audits and Audited Financial Statements (§ 668.23)

Comments:

A few commenters asked the Department to clarify the proposed requirement in § 668.23(d)(4) under which a proprietary institution must disclose in a footnote to its audited financial statements the 90/10 revenue percentage and the components of that percentage. The commenters suggested

that the Department specify that the reference in the regulations to Federal revenue means Title IV, HEA revenue and confirm their understanding that an institution must disclose: (1) The dollar amount of the numerator and denominator of the 90/10 ratio; (2) the dollar amount of the temporary relief attributed to institutional loans under the Net Present Value (NPV) calculation; and (3) the amount of loan funds that exceed the loan limits in effect before ECALSA that are treated as non-Federal revenue in the denominator of the 90/10 ratio.

Discussion:

Under proposed § 668.23(d)(4), a proprietary institution would have to disclose, by source, the amount of Federal and non-Federal revenue the institution included in its 90/10 calculation. We are amending the regulations to clarify that “source” means the individual categories of revenues identified in Appendix C to subpart B of part 668. To calculate its 90/10 percentage, an institution would have to compile the information detailed in Appendix C, particularly the aggregated and adjusted amounts in section 2. We therefore believe that it is reasonable to require the institution to disclose this information. Given the added complexities that come from these additional categories of revenue, disclosing the institution's calculation will simplify the presentation in the financial statements and facilitate the review of that information by the Department.

Changes:

Section 668.23(d)(4) is amended to provide that a proprietary institution must disclose in a footnote to its audited financial statements, the dollar amount of the numerator and denominator of its 90/10 ratio as well as the individual revenue amounts identified in section 2 of Appendix C to part 668.

Revenue Generated From Programs and Activities (§ 668.28)

Comments:

One commenter asked the Department to clarify whether the revenue from students taking a course offered by an institution as part of an eligible Title IV, HEA educational program counts for 90/10 purposes if the students are taking the course to prepare for an industry recognized credential or to transfer to another institution. For example, students that are not enrolled in a Title IV, HEA-eligible program take an Accounting 400 course, normally offered as part of a Title IV, HEA-eligible accounting program, as a refresher course to sit for the Certified Public Accounting exam or to transfer the credits from the course to another institution.

Discussion:

An institution may count the revenue described by the commenter as long as the course or program is offered for the purpose of preparing students for taking an examination for an industry recognized credential, or for any other purpose described in § 668.28(a)(3)(iii) that would otherwise qualify the revenue from that course or program to be included in the 90/10 calculation. However, payments from a student taking the class for transfer credits would not count as revenue because the student is not taking the class for any of these purposes. An institution should make sure that it appropriately documents any revenue the institution includes from these classes in its 90/10 calculation.

Changes:

None.

Revenue Generated From Institutional Aid (§ 668.28)

Comments:

A few commenters asked the Department to clarify whether installment sales contracts are considered to be loans made to students under § 668.28(a)(5)(i). Other commenters noted that funds are not advanced to a student under an installment sales contract, and funds are not paid in full to a student's account. Rather, an installment sales contract is paid over time by the student to the institution. As a result, the commenters concluded that installment sales contracts should not be treated as loans under the NPV formula.

Some commenters asked for clarification of the preamble discussion (74 FR 42390) regarding the disposition of third-party loans made to students that are subsequently acquired by the institution.

Other commenters urged the Department to reconsider the provision in § 668.28(a)(5)(iv) that a tuition discount is a form of a scholarship that must be disbursed from a restricted account with funds from an outside source. The commenters stated that treating a tuition discount in this way is inconsistent with the intent of the HEOA and would encourage students to incur more debt.

A few commenters asked the Department to clarify that payments made by students on financing arrangements that do not qualify as institutional loans count as cash collected by the institution for 90/10 purposes.

Discussion:

An installment sales contract was included in the proposed regulations because we believed that it could be structured to satisfy all of the conditions of an institutional loan that were set forth in proposed § 668.28(a)(5)(i). However, although we noted in the preamble to the NPRM (74 FR 42389) that, to be included in the NPV calculation, an installment sales contract that would be classified as an institutional loan would have to be credited in full to the student's account, this condition was not included in the proposed regulations. To address the confusion reflected in the comments over the qualifying conditions for institutional loans, and the general public view that a typical installment sales contract does not provide for funds to be credited to a student's account, we agree to remove installment sales contracts from this section of the regulations.

With regard to a loan made by a third party to a student at an institution, in the normal course, the proceeds of the loan would be credited to the student's account, and the amount credited that paid for tuition and fees not covered by Title IV, HEA aid would count as non-Title IV, HEA revenue in the 90/10 calculation. If the institution made the same loan itself, it would only be permitted to count the NPV of the loan in the 90/10 calculation. In both cases the institution has credited loan proceeds of the same value to the student's account but the institution would derive a greater benefit for 90/10 purposes from the loan that was made by the third party. For example, assuming the loan proceeds from a third party pay $1,000 for tuition and fees not covered by Title IV, HEA aid, the entire $1,000 is counted as non-Federal revenue for 90/10 purposes. If the institution made the same loan, the amount of funds counted as non-Federal revenue would be less because of the NPV calculation. For instance, if the institution uses the simpler alternative NPV approach, the amount of the non-Federal revenue would be $500 or 50% of the loan. This different treatment of the loan proceeds is based upon which party is making the loan to the student without transferring it afterwards to, or from, the institution. These provisions are not intended to permit an institution to arrange with a third party to transfer student loans after they are made in order to distort the way the revenue from those loans is treated under this provision. To equalize the outcome between an institution and a third party making and purchasing a loan, an institution that purchases a student loan must treat it for 90/10 purposes as if the institution made the loan itself.

Similarly, if an institution makes a loan and transfers it to a third party, the Department would not view that loan as a loan that could be included in any NPV calculation pursuant to section 487(d)(1)(d)(III) of the HEA. That section

requires a loan that is included in the NPV calculation to be subject to regular loan repayment and collection. Any institutional loan that is sold to a third party within a year of when it was made must be treated for 90/10 purposes as a loan made by a third party. The amount the institution may count as non-Federal revenue may not be more than the amount paid to the institution for that loan, less any amount the institution agrees to pay the third party if the loan goes into default or otherwise triggers a contingent payment by the institution. Consistent with the Department's current treatment of recourse loans and the requirement to use the cash basis of accounting, the institution must adjust its 90/10 revenue for any such payment on an institutional loan in the fiscal year when the payment is made.

We disagree with the commenters that the proposed regulations regarding tuition discounts are inconsistent with the intent of the law. The regulations simply reflect section 487(d)(1)(D)(iii) of the HEA by specifying that an institution may include scholarships as revenue if the scholarships are disbursed from an established restricted account and that funds in that account represent designated funds from an outside source or from income earned on those funds. That section of the HEA states that scholarships may be provided by an institution in the form of monetary aid or tuition discounts.

With regard to financing arrangements that are not loans, there is no change in the Department's policy that cash payments made under those arrangement count as non-Title IV, HEA revenue for 90/10 purposes.

Changes:

Section 668.28(a)(5)(i) is revised to provide that, to be included as an institutional loan for NPV purposes, a loan made to a student must be credited in full to the student's account.

Net Present Value (NPV)

Comments:

Several commenters objected to the provision in § 668.28(b)(2) that an institution may not sell a loan it made to student until the loan is in repayment for at least two years. Although this provision would apply only if an institution chose to use the alternative approach to calculating the NPV of its loans (using 50 percent of loans made as the NPV), the commenters argued that holding the loans for at least two years is contrary to both statutory intent and institutional mission. The commenters reasoned that in response to the loss of availability of private student loans, the NPV approach provided by the HEOA is intended to give an immediate benefit to an institution that had to fill a funding gap itself by making loans to its students. To the second point, the commenters stated that the primary mission of an institution is to provide education and training, not to become a lender or remain in the lending business.

Other commenters agreed with the rationale for the two-year ban on selling loans, but argued that the two-year period was too long and would unfairly impact an institution that provided loan funds to students who are not “high risk” and whose loans would perform within commercially acceptable norms. To mitigate this impact, the commenters recommended reducing the ban to one year.

One commenter questioned whether the proposed regulations ensure that the calculation of the NPV for institutional loans takes into account the possibility that institutions do not intend to collect the loans they make to students. The commenter asserted that this practice calls into question an institution's willingness or ability to accurately report estimates of annual payments due, as well as annual payments collected on these loans. The commenter also asked whether institutional loans that default are properly accounted for 90/10 purposes and if the Department has the authority to require, or would require, an institution to disclose information about its loan defaults.

Discussion:

As stated in the NPRM (74 FR 42391), we proposed the alternative approach for calculating the NPV as an administrative convenience for an institution that either prefers a simpler method to determine the NPV or does not need the additional non-Federal revenues that might be counted if the NPV formula is used. It is solely up to the institution whether to use this alternative method or the actual NPV calculation. Each approach has costs and benefits that must be weighed by the institution. If the institution believes the alternative approach is too restrictive or somehow not in keeping with its mission, it should use the NPV calculation.

With regard to the comments about an institution's unwillingness to collect the loans it makes, we note that the institution might benefit initially from the NPV calculation, but because its collection rate would decrease significantly if it continues this practice, the institution would derive no benefit from future NPV calculations. We also note that the two-year ban on selling institutional loans, which applies to institutions that choose to use the alternate NPV approach, is necessary to ensure that the Department and other oversight entities have sufficient time to monitor whether the loans are subjected to routine collection efforts.

Changes:

None.

Revenue From Loan Funds (§ 668.28)

Comments:

A few commenters noted that, although the proposed regulations in § 668.28(a)(6) provide that an institution may count as non-Title IV, HEA revenue the amount of a loan disbursement for a payment period that exceeds the amount a student would have received before the enactment of ECALSA, the regulations did not address how an institution should treat the excess loan funds when a student withdraws during a payment period. The commenters suggested that the excess loan funds should be returned in proportion to the overall loan disbursement for the payment period. Another commenter requested that when a student takes sequential courses within a non-term program, and is charged on a course-by-course basis, the excess loan funds should be attributed within a payment period on a course-by-course basis. In this case, several courses make up the payment period.

Discussion:

When some of a student's loan funds are classified as funds in excess of loan limits existing prior to ECASLA, those excess loan amounts are included as revenue from a source other than Title IV, HEA program funds under § 668.28(a)(6) if those excess amounts pay for institutional charges remaining on the student's account after Title IV, HEA funds are applied. The determination of which loan funds are classified as “post-ECASLA” funds,

i.e.,

are funds in excess of loan limits existing prior to ECASLA, is generally made on a payment period basis. That is, if a student's loan for the loan period contains a post-ECASLA amount and the post-ECASLA amount is

1/3

of the total loan amount, then each payment period's loan disbursement is generally considered to consist of

1/3

post-ECASLA loan funds and

2/3

pre-ECASLA loan funds. However, if a student takes sequential courses within a non-term program where several courses make up a payment period, and the student is charged on a course-by-course basis, then the determination of which loan funds are classified as post-ECASLA funds may be determined on a course-by-course basis. Under § 668.28(a)(7)(iv), loan funds that are returned pursuant to § 668.22 when a student withdraws from school are excluded from school revenues. The Secretary intends that, when a school determines the amount of loan funds that are excluded from revenues under

§ 668.28(a)(7)(iv), it considers the returned loan funds to be pre-ECASLA loan amounts and post-ECASLA loan amounts based on the ratio that existed for those categories of funds in the student's loan for the loan period.

Changes:

Section 668.28(a)(7)(iv) is amended to provide that, in determining the amount of loan funds that are excluded from 90/10 revenues under § 668.28(a)(7)(iv) when a student withdraws pursuant to § 668.22, and the institution returns loan funds from a loan disbursement considered to consist of pre-ECASLA loan funds and loan funds that were in excess of loan limits existing prior to ECASLA, the funds that the institution returns are pre-ECASLA loan amounts and post-ECASLA loan amounts based on the proportion of those loan amounts that existed in the loan disbursement used in the Return calculation. For example, a student's loan disbursement for a payment period is $3,000, and $1,000 represents the funds in excess of loan limits existing prior to ECASLA. The proportional breakdown of the funds returned under the Return calculation is two-thirds pre-ECALSA loan funds and one-third post-ECASLA loan funds.

Application of Funds (§ 668.28)

Comments:

A few commenters noted that the proposed regulations did not address how military education benefits are treated for 90/10 purposes. The commenters argued that because students have earned these benefits through employment in difficult and often dangerous conditions, and are free to use the benefits at an eligible institution, the benefits should be treated for 90/10 purposes as earned employment benefits. However, a student receiving these benefits, which are essentially restricted to pay for tuition and fees, may also be fully eligible for Title IV, HEA aid. Consequently, the commenters asked the Department to revise the regulations to provide that military education benefits overcome the presumption that Title IV, HEA funds are used first to pay for tuition and fees.

Discussion:

Section 487(d)(1)(C) of the HEA contains the list of funds or sources of aid that overcome the presumption that Title IV, HEA funds are used first to pay for tuition and fees. The Department does not have the authority to expand that list.

Changes:

None.

Notification to the Department (§ 668.28)

Comments:

Several commenters objected to the proposal in § 668.28(c)(3) that an institution must notify the Department that it failed the 90/10 requirement no later than 45 days after the end of its fiscal year. Some of the commenters stated that there was no reason to shorten the current 90-day notification period. Other commenters argued that because the penalty for failing 90/10 (especially for a second consecutive year) is so severe, an institution should not be required to report unaudited data. According to the commenters, this may result because the small number of independent auditors who are experts in 90/10 calculations may be unavailable to the large percentage of for-profit institutions that have fiscal years ending December 31, because this is time that the auditors would normally be busy doing audit and tax work.

Discussion:

We are not persuaded that an institution that knows it is close to failing the 90/10 requirement could not plan for or take the steps necessary to engage an audit firm in time to meet the 45-day reporting deadline.

Changes:

None.

Institutional Plans for Improving the Academic Program (§ 668.43(a))

Comments:

A few commenters stated that the requirement in the proposed regulations that an institution make readily available to enrolled and prospective students any plans by the institution for improving the academic program of the institution should include the statement in the preamble of the NPRM that an institution is allowed to determine what a “plan” is, including when a plan becomes a plan.

Discussion:

We agree that including the concept that an institution has the discretion to determine when a plan exists would clarify the intent of the regulations.

Changes:

Section 668.43(a)(5)(iv) is amended to clarify that an institution must make readily available to students any plans by the institution for improving the academic program of the institution, upon a determination by the institution that such a plan exists.

Peer-to-Peer File Sharing and Copyrighted Material (§§ 668.14(b)(30) and 668.43(a)(10))

Comments:

A few commenters supported the proposed changes asserting that they represented a fair interpretation of the intent of the statute and would aid institutions in both interpreting and properly following the new statute. One commenter asked whether the requirement that an institution offer, to the extent practicable, legal alternatives to illegal downloading or otherwise acquiring copyrighted material could be satisfied by the institution simply not blocking legal alternatives. One commenter expressed concern that the requirement that, as a part of an institution's plans for combating the unauthorized distribution of copyrighted material, the institution must include the use of one or more technology-based deterrents as well as procedures for periodically reviewing the effectiveness of the plans would be unduly financially and administratively burdensome for institutions.

Discussion:

We do not believe that simply not blocking legal alternatives for downloading or otherwise acquiring copyrighted material qualifies as “offering” legal alternatives. The requirements of § 668.14(b)(30)(ii)(A) and (B), that an institution must periodically review the legal alternatives and make available the results of the review to its students through a Web site or other means, support the notion that an institution's actions in this area must be active, rather than passive. We note, however, that an institution must offer such legal alternatives “to the extent practicable.” Thus, how or whether the institution offers such alternatives is controlled by the extent to which it is practicable for the institution to do so. As stated in the preamble to the NPRM (74 FR 42393), the Department anticipates that individual institutions, national associations, and commercial entities will develop and maintain up-to-date lists of legal alternatives to illegal downloading that may be referenced for compliance with this provision.

The requirement that, as a part of an institution's plans for combating the unauthorized distribution of copyrighted material, the institution must include the use of one or more technology-based deterrents is statutory (see section 485(a)(1)(P) of the HEA) and we do not have the authority to remove this requirement. Moreover, we believe that the requirement that an institution's plans include procedures for periodically reviewing the effectiveness of the institution's plans for combating the unauthorized distribution of copyrighted material is essential for institutions to comply with the requirements in section 485(a)(1)(P) and 487(a)(29) of the HEA.

Changes:

None.

Consumer Information (§§ 668.41 and 668.45)

Comment:

One commenter suggested that we remove the definition of “Retention rate” from the regulations in § 668.41. The commenter stated that it is unnecessary because the regulations already instruct institutions to disclose

retention rates as they are reported to the Integrated Postsecondary Education Data System (IPEDS) and IPEDS provides the definition on its Web site for institutions when they report that information. Of greater importance is the fact that, if the National Center for Education Statistics decides to modify the definition in the future, it would be better for them not to be constrained by having the current definition codified in the regulations.

Discussion:

We agree.

Changes:

We have removed the definition of “Retention rate” from the regulations.

Comments:

Although some commenters agreed with some or all of the proposed regulations addressing consumer information disclosures, a number of them objected to the proposed provision in § 668.41(d)(5)(iii) that would require an institution to disclose any placement rates it calculates, noting that, regarding placement, the statute only requires disclosure of information, not an actual rate. The statute addresses the requirement to report information about the “placement in employment of, and types of employment obtained by, graduates of the institution's degree or certificate programs.” Because the statute specifically uses the term “rates” when it addresses graduation, completion, and retention, but not when it addresses placement, the commenters stated that the reporting of a “rate” for placement information exceeds the scope of the statute.

For similar reasons, some of the commenters objected to the requirement to report the methodology that the institution uses in determining placement information, because a methodology would appear to be applicable only to an officially calculated rate. Further, some commenters noted that, although institutions may calculate various placement rates for their own purposes, those rates are not necessarily intended to be disclosed to the public. One commenter added that requiring institutions to report placement rate data that they voluntarily produce for their own purposes (such as for internal assessment of their programs) would be a disincentive to the institution to engage in that activity.

This commenter did, however, support the concept of requiring an institution to make available to students any placement data that are used in advertising, marketing, or recruitment. Noting that some rates might be calculated on individual programs or other subcategories of the institution, several commenters suggested that the requirement to report placement rates that the institution voluntarily calculates should only be applicable to institution-wide placement rates. One commenter noted that reporting placement rates for individual programs is not required by the statute, cannot reasonably be implemented, and is unnecessary. The commenter specifically noted that current regulations addressing an institution's requirement to have a program participation agreement require an institution that advertises job placement rates as a means of attracting students to provide information about its employment and graduation statistics.

A number of commenters stated that the reporting of actual placement rates would be excessively burdensome for institutions and that the burden would outweigh the value of this reporting. A couple of commenters expressed concern that the regulations would force colleges to obtain information from graduates that the graduates are not obligated to provide, resulting in biased responses that would “taint” the information made available to students. On the other hand, a couple of other commenters stated that “when an institution has calculated placement rates, suggesting that it wants to know whether, when, and where its graduates are employed, then it is reasonable to think that the subject is of interest and value to students and prospective students as well, and should be shared with them.” Finally, although these same two commenters supported removing the words “upon request” from the several places in the regulations where institutions are required to make certain information available to students and prospective students, another commenter stated that the Department should not delete those words when describing the institution's responsibility to make job placement information available to its consumers. The commenters who supported removing those words stated that removing them would make it clearer that the consumer information in question must be easily available. However, the commenter who opposed removing those words stated that, because the words were in the HEA, the Department did not have the authority to exclude them from the regulatory language implementing that part of the HEA.

Discussion:

The Department believes that, in addressing information dissemination activities, congressional intent was that students and prospective students be provided pertinent information related to an institution's completion, graduation, transfer-out, and placement record. Only when sufficient information is available in these areas can students and prospective students make informed choices about the institution. The statute allows institutions to use placement information that the institution obtains from sources such as alumni and student satisfaction surveys, and it does not mandate that institutions calculate an actual rate for this purpose. However, when an institution has voluntarily calculated a placement rate, regardless of whether it is an institution-wide placement rate or a placement rate of only one or more programs or other subcategories of the institution, and regardless of whether the institution advertises its job placement rates, we believe that it is consistent with congressional intent to have the institution disclose this information to its consumers. Thus, although the regulations do not mandate that the institution calculate a placement rate, when the institution has voluntarily chosen to do so, the regulations require it to provide that information to its students and prospective students. To help ensure that the information is as meaningful as possible, the regulations require that the institution disclose not only the source of the information provided, but the time frames and methodology associated with the calculation or production of the information.

Finally, regarding the exclusion of “upon request” when describing the institution's responsibility to make job placement information available to its students and prospective students, the Department notes that institutions typically compile and make the information available on their Web sites, but possibly in paper form as well. Consequently, we view the inclusion of the phrase “upon request” to mean that this information is readily available to students who wish to see it. As a matter of course, students coming to an institution's Web site to learn about the institution should be able to find this information, and students inquiring directly may be referred to the Web site or provided with the information on paper.

Changes:

None.

Comment:

With regard to the disaggregation of completion or graduation rates by receipt or non receipt of certain types of aid, one commenter expressed concern that the wording in § 668.45(a)(6)(ii), which states that “students shall be considered to have received the aid in question only if they received such aid in the period specified in paragraph (a)(3) of this section,” would exclude students

who received aid for the first term (the period in question), but who had the receipt of that aid delayed beyond the period in question due to an unanticipated deferral of payment, such as for verification. The commenter stated that receipt of aid in this circumstance would have the same effect on access and enrollment as if the aid were paid in the first term. The commenter expressed hope that the Department's intent was not to have the students listed as not receiving the aid in question.

Discussion:

We agree that students who receive aid in a second term that was intended for the first term should be listed in the same category as students who actually received their aid in the first term.

Changes:

We have changed the word “in” to “for” in § 668.45(a)(6)(ii).

Comment:

Several commenters expressed concern that recordkeeping and reporting requirements in § 668.45 could serve as a disincentive to institutions to offer a comprehensive transition and postsecondary education program (as addressed in subpart O of the regulations, Financial Assistance for Students with Intellectual Disabilities). The commenters questioned whether these students would negatively affect an institution's completion or graduation rate because students with intellectual disabilities do not typically matriculate and graduate with a regular diploma.

Discussion:

Section 668.45 requires an institution to prepare a completion or graduation rate (and sometimes a transfer out rate) for its certificate- or degree-seeking, first-time, full-time undergraduate students. If an institution has a comprehensive transition and postsecondary education program, some of its students with intellectual disabilities who are enrolled in that program may factor into the institution's completion and graduation rate. It is unlikely that they would be part of an institution's transfer out rate. A comprehensive transition and postsecondary education program may be a degree or certificate program, or it may be a non-degree or non-certificate program. Certificate or degree-seeking, first-time, full-time undergraduate students with intellectual disabilities who are enrolled in a comprehensive transition and postsecondary education program will be part of an institution's completion and graduation rate calculations. As with other students, if they complete or graduate from their degree or certificate program within the time frames listed in § 668.45(b), they will be listed. The Department does not believe that first-time, full-time, undergraduate students with intellectual disabilities who are enrolled in a comprehensive transition and postsecondary education program designed to lead to a degree or certificate will necessarily have completion or graduation rates significantly different from first-time, full-time, undergraduate students without intellectual disabilities. Students with intellectual disabilities who are enrolled in a comprehensive transition and postsecondary education program that does not lead to a degree or certificate will not be a factor in an institution's graduation and completion rate.

Changes:

None.

Comments:

Two commenters noted that removing the reference to paragraph (d) in § 668.48(b) leaves out the exclusion of students who have left school to serve in the Armed Forces, to serve on official church missions, or to serve with a foreign aid service of the Federal Government from the completion or graduation, or transfer-out rate information required by § 668.48.

Discussion:

The commenters are correct. The proposal to remove the reference to paragraph (d) and replace it with paragraph (e) was a mistake.

Changes:

None.

Campus Safety Provisions

Reporting and Disclosure of Information (§ 668.41(a))

Comment:

One commenter requested clarification of what would be considered an “on-campus student housing facility.” Specifically, the commenter questioned how this definition should be applied in cases in which there are public-private partnerships or third parties who may own or control property on areas contiguous to the campus or on university-owned property.

Discussion:

The Department recognizes that there are a myriad of possible arrangements that an institution may have for housing facilities for students. Regarding whether a particular student housing facility is an “on-campus” facility, we refer to the current definition of the term “campus” in § 668.46(a). To clarify, any student housing facility that is owned or controlled by the institution, or is located on property that is owned or controlled by the institution, and is within the reasonably contiguous geographic area that makes up the campus is considered an on-campus student housing facility.

Changes:

None.

Missing Student Notification Procedures (§ 668.46(h))

Comment:

A number of commenters requested clarification of how the proposed requirement in § 668.46(h) relates to requirements under the Family Educational Rights and Privacy Act (FERPA). Under this section, institutions must provide students living in an on-campus student housing facility an option to register a confidential contact person to be notified in the case that the student is determined missing.

Discussion:

Although missing student contact information would be considered part of a student's education records under FERPA, section 485(j) of the HEA, as amended by section 488(g) of the HEOA, requires that students be provided the option to register “confidential” contact information. This indicates that a student's contact information should receive greater privacy protections than FERPA provides. Under section 485(j) of the HEA, only authorized campus officials and law enforcement officers in furtherance of a missing person investigation may have access to this confidential contact information. We view a student's identification of a contact person pursuant to section 485(j) of the HEA and § 668.46(h) as providing permission for law enforcement personnel to contact the identified individual under the circumstances identified in these statutory and regulatory provisions.

Changes:

None.

Comment:

Some commenters expressed concern that the proposed notification procedures in § 668.46(h)(2) may lead to unnecessary alarm on the part of parents, guardians, and emergency contact persons, as well as a needless burden on campus and local law enforcement agencies. Specifically, they requested clarification that the notification procedures would only take effect if, after a brief investigation, the missing student report is found to be valid. In addition, several commenters requested clarification about the 24 hour time period requirements associated with the notification procedures, suggesting that an institution's policy statement must explicitly state that the institution must make the notification within 24 hours after an official determination has been made that the student has been missing for 24 hours.

Discussion:

The proposed regulations in § 668.46(h)(2) specify that an institution's notification procedures must go into effect within 24 hours after a student has been officially determined to have been missing for 24 hours by the

campus security department or local law enforcement agency, as applicable. This does not preclude an institution from either making a determination that a student is missing before the student has been missing for a full 24 hours or initiating notification procedures as soon as it determines that the student is missing. A brief investigation as suggested by the commenter would presumably be included in this official determination,

e.g.,

authorities could check sources such as Facebook in trying to determine whether the student is missing. We agree, nevertheless, that the regulations could be clearer in delineating the 24 hour time periods.

Changes:

Section 668.46(h) is revised to clarify the time frame within which notification must occur.

Comment:

A commenter stated that the regulations in § 668.46 were unclear and suggested a new structure.

Discussion:

We reviewed the commenter's suggested language, but we continue to believe the current structure is sufficiently clear. This language reflects the tentative agreement reached by the Team V committee during negotiated rulemaking, and the Department wishes to preserve this agreement.

Changes:

None.

Annual Fire Safety Report—Definitions of Terms (§ 668.49(a))

Comment:

One commenter suggested that the definition of

value of property damage

should be revised to include only the damage to property, furnishings, and equipment that is owned, leased, or otherwise controlled by the institution. The commenter argued that it could be burdensome for institutions to determine the value of property and contents that are owned by third parties and that this information could be deemed private by the other party. In addition, the commenter suggested that institutions should have the option to provide explanatory text and clarifying information for estimates of property damage. The concern was that a high dollar value may create false concern as to the safety on campus, when in reality, a high value could be from damage to a single piece of expensive equipment.

Discussion:

The definition of the

value of property damage

applies to an on-campus student housing facility and includes the value of property and the contents within. The Department recognizes that many of the contents on a property may be owned by third parties. However, because the statute requires that information be provided about damage caused by fires in on-campus student housing facilities, this estimate should include the value of property that is not owned or controlled by the institution. Although an institution may not be able to determine the exact value of the contents, it must give the most accurate estimate possible in order to be in compliance with the regulation. With regard to explanatory text, institutions have the flexibility to include additional information in the annual fire safety report. In reporting statistics to the Department, the Web-based collection tool will include space for institutions to include explanatory text for each item that will be viewable on the public Web site.

Changes:

None.

Comment:

One commenter stated that the definition of

fire

in § 668.49(a) was ambiguous and needed to be clarified. Specifically, the commenter suggested that phrases such as “open flame or other burning in a place not intended to contain the burning or in an uncontrolled manner” and “place” could be interpreted differently by institutions and, therefore, could undermine the consistency of the definition of “fire” for statistical and comparative purposes. Further, the commenter suggested an alternate definition drawn from insurance law that would include the concept of a “hostile fire,” or one that includes any combustion that cannot be controlled, escapes from where it was initially set and confined, and that was not intended to exist. The commenter also questioned the feasibility of gathering statistics on each instance of a fire that does not result in injury, death, or property damage, suggesting that reports of insignificant fires will obscure attention to serious fire problems or trends.

Discussion:

Section 485(i)(1)(A) of the HEA requires that institutions collect and report statistics on the number of fires in each on-campus student housing facility, and section 485(i)(3) of the HEA further requires that institutions maintain a log of all fires that occur in any on-campus student housing facility. The Department and non-Federal negotiators worked diligently to define the term

fire,

understanding that it is difficult to devise a definition that will cover all of the fires that we intend to be included yet still exclude the ones that we do not. The negotiators reached a tentative agreement on the definition of

fire,

and the Department wishes to preserve this language. We continue to believe that the definition set forth in the proposed regulations can reasonably be interpreted and applied by institutions.

In addition, under the HEA all fires will be included in the institution's statistics and in the fire log. Therefore, the definition of

fire

arguably may not be limited to only fires that result in injury, death, or property damage. Further, as stated in the preamble to the NPRM, an institution's policies regarding fire safety do not affect the classification of whether a fire meets the definition of fire. As an example, one commenter suggested that a candle wick might be a “place” that is intended to contain burning, but that student residence hall policies might prohibit candles, rendering the candle wick no longer a “place” intended to contain a flame because the candle should not be there at all. However, a candle wick is still a place intended to contain burning, regardless of whether candles are prohibited under an institution's policies. The Department anticipates including additional examples in a revised version of the Handbook for Campus Crime Reporting to provide guidance to institutions in complying with these regulations.

Changes:

None.

Annual Fire Safety Report—Statistics (§ 668.49(b) and (c))

Comment:

One commenter suggested that an institution should not be responsible for tracking an individual with a fire-related injury who has separated from the university for the purpose of potentially including that individual in the institution's statistics on fire-related deaths. If that individual dies within one year of sustaining injuries as a result of a fire, then the institution may not know whether that individual died as a result of those injuries.

Discussion:

The regulations do not require an institution to track an individual that separates from, and is no longer in contact with, the institution. However, the institution is expected to make a reasonable effort to ascertain whether an individual's death is considered a fire-related death, as defined in § 668.49(a). For example, if an individual with fire-related injuries is hospitalized a few miles from the institution, the institution may reasonably be expected to track this person for potential inclusion in the institution's statistics. By contrast, if an individual separates from the institution and travels to another country, the institution may not be expected to track them for inclusion in the institution's statistics.

Changes:

None.

Annual Fire Safety Report—Description of Policies (§ 668.49(b))

Comment:

One commenter suggested that we revise the language related to the reporting of fire statistics under

proposed § 668.49 to specify that these statistics include fires that are reported to a “campus fire authority.”

Discussion:

Institutions are expected to collect information about, and report on, all fires regardless of whether they were reported to a campus fire authority. Fires may be reported to a variety of authorities at an institution other than a campus fire authority (

e.g.,

to a residence life officer). The intent of the regulations is to include these fires in an institution's statistics and fire log.

Changes:

None.

Comment:

Two commenters suggested that the Department require that institutions have fire doors and other doors in the path of exit from a fire inspected at least annually and disclose in their annual fire safety report how often the doors are inspected. The commenters noted that proper maintenance and inspection of every fire safety system element is critical to ensure that these elements can function in the case of a fire.

Discussion:

We define a

fire safety system

in § 668.49(a) as “any mechanism or system related to the detection of a fire, the warning resulting from a fire, or the control of a fire,” listing elements including, among others, sprinkler systems, fire detection devices, stand-alone smoke alarms, and fire doors and walls as examples of what might be included in a fire safety system. The commenter correctly states that maintenance and inspection of a fire safety system can help ensure that the elements are properly functioning. Institutions are required to describe the fire safety system in each on-campus student housing facility, and an institution may provide information about how often the elements of each fire safety system are inspected or maintained in this description. The Department expects that an institution will adequately maintain the elements of its fire safety systems. However, we do not intend to specify a maintenance or inspection schedule for each of these elements.

Changes:

None.

Annual Fire Safety Report—General (§ 668.49)

Comment:

One commenter suggested a number of minor changes to a variety of provisions, including:

• Replacing the phrase “may include” in the definition of a fire-related injury in § 668.49(a) with the word “includes”;

• Replacing the words “faculty, staff” in the definition of a fire-related injury in § 668.49(a) and in the requirement that an institution include policies regarding fire safety education and training programs in its annual fire safety report in § 668.49(b)(6) with the word “employees”;

• Replacing the words “resulting from” in the definition of a fire-safety system in § 668.49(a) with “of”;

• Replacing the phrase “smoke, water, and overhaul” in the definition of value of property damage in § 668.49(a) with “smoke and water”; and

• Revising the § 668.49(c)(1)(ii) to read “The number of persons who received fire-related injuries that resulted in treatment at a medical facility, including at an on-campus health center.”

Discussion:

We agree to make some of these changes. In particular, we agree with the commenter that institutions should include the number of persons who received fire-related injuries, as opposed to the actual number of injuries, as a single person may have more than one injury. We also agree that the term “employees” is more precise than the words “faculty, staff” and have revised the regulations accordingly.

Changes:

We have revised the language in § 668.49(c)(1)(ii) to clarify that the number of injuries refers to the number of people with fire-related injuries. We have also replaced the words “faculty, staff” with the word “employees” in both § 668.49(a) and § 668.49(b)(6).

Comment:

One commenter suggested that we revise § 668.43 to include two additional disclosures specified in the HEOA that require institutions to disclose their policies on vaccination, and information on diversity of the student body.

Discussion:

The Department is not addressing all of the self-implementing provisions of the HEOA in these regulations. We intend to publish separate regulations covering these new disclosures.

Changes:

None.

Subpart O—Financial Assistance for Students With Intellectual Disabilities

Scope and Purpose (§ 668.230)

Comment:

One commenter expressed concern that the limit on the amount of time for which a student can receive a Pell Grant would adversely affect the completion time of a student with an intellectual disability because the student may need to spend additional time in remedial or developmental classes. The commenter suggested that the Department waive the cap on the number of Federal Pell Grant awards a student with an intellectual disability may receive.

Discussion:

The Federal Pell Grant statutory cap is 18 semesters or 9 years. Because students with intellectual disabilities are not yet enrolled in comprehensive transition and postsecondary programs approved by the Department under these regulations, we do not have any data that suggests that these students will need longer to complete their comprehensive transition and postsecondary programs. For this reason, we believe it is inappropriate to waive the Federal Pell Grant cap for these students as part of these regulations.

Changes:

None.

Comment:

Two commenters requested that proposed § 668.230 be revised to require the Secretary to waive any rules necessary to ensure that students enrolled in eligible comprehensive transition and postsecondary programs remain eligible for Federal Pell, FSEOG, and FWS program funds.

Discussion:

Section 484(s)(3) of the HEA authorizes the Secretary to waive any statutory provision applicable to the Federal Pell Grant, FSEOG, and FWS programs—other than the need analysis provisions in part F of the HEA—as well as any institutional eligibility provisions that the Secretary determines necessary to ensure that programs enrolling students with intellectual disabilities otherwise determined to be eligible may receive financial assistance. While this section of the HEA authorizes the Secretary to grant the waivers of the sort described by the commenters, it does not require the Secretary to do so. The Secretary generally does not regulate the Department's own procedures.

Changes:

None.

Definitions (§ 668.231)

Comment:

A few commenters expressed concern that the proposed regulations do not sufficiently convey the importance of employment as a desired outcome for students with intellectual disabilities who enroll in eligible comprehensive transition and postsecondary programs.

Discussion:

We agree with the commenters that gainful employment is an important outcome for students with intellectual disabilities participating in comprehensive transition and postsecondary programs. In fact, the Department has a long history of providing national leadership for, and administration of, programs that develop and implement comprehensive and coordinated programs of vocational rehabilitation, supported employment and independent living for individuals with disabilities, through services, training and economic opportunities, in order to maximize their employability, independence and integration into the workplace and the community.

We believe that the regulations sufficiently ensure that the comprehensive transition and postsecondary programs approved by the Department will focus on ensuring that enrolled students will be prepared for gainful employment. Specifically, in the definition of the term comprehensive transition and postsecondary program in § 668.231, paragraph (a)(3) provides that the program is one that is designed to support students with intellectual disabilities who are seeking to continue academic, career and technical, and independent living instruction at an institution of higher education in order to prepare for gainful employment. Under § 668.232(a), an institution applying to offer a comprehensive transition and postsecondary program as an eligible program under title IV of the HEA must provide to the Secretary a detailed description of that program, including a description that addresses all of the components of the program, as defined in § 668.231. Because § 668.231(a)(3) specifically references that a comprehensive transition and postsecondary program is one that is designed to prepare enrolled students for gainful employment, the detailed description required under § 668.232(a) must include a description of how the program meets this definitional requirement. We, therefore, believe that the regulations sufficiently ensure that any comprehensive transition and postsecondary program will focus on the outcome of gainful employment for students participating in these programs.

Changes:

None.

Comment:

Two commenters requested clarification of how half-time participation for students with intellectual disabilities should be determined, specifically, whether “half-time” is based on real time or credit hours, and whether it is calculated per semester or across the length of the program. In a related issue, commenters also suggested that the proposed regulations place too much emphasis on the academic portions of the program, arguing that the half-time integration criterion should not be linked exclusively to coursework and internships but should be expanded to include outside activities.

Discussion:

Section 668.231(a)(5) specifies that a comprehensive transition and postsecondary program is a program that requires students with intellectual disabilities to have at least one-half of their participation in the program, as determined by the institution, focus on academic components through one or more of a variety of activities that integrate students with intellectual disabilities into academic contexts with students without disabilities. Institutions have a fair degree of flexibility in determining the meaning of “half-time participation” in designing a comprehensive transition and postsecondary program: It may be reasonably based on real hours, credit hours, or a combination of the two, and it may be calculated across the span of the program or by term, as long as an institution clearly explains in its application to add an eligible program how this will be determined.

With regard to the comments stating that the proposed regulations place too much emphasis on the academic portions of the program, we disagree. Section 668.231(a)(5) only requires that the program require enrolled students to have at least one half of their participation in the program focus on academic components. We fully expect that the remaining portion of the program will consist of other activities that include having enrolled students with intellectual disabilities participate with students without disabilities in such non-academic settings as clubs, organizations, service projects, or other university or community life activities.

Changes:

None.

Comment:

A few commenters expressed concern that the proposed definition of a

student with an intellectual disability

in § 668.231(b) does not exist in the Individuals with Disabilities Education Act (IDEA). Specifically, several commenters asked which students would be considered students with intellectual disabilities under the HEA.

Discussion:

Under § 668.231(b), a

student with an intellectual disability

is defined as a student with mental retardation or a cognitive impairment characterized by significant limitations in intellectual and cognitive functioning and adaptive behavior, as expressed in conceptual, social, and practical adaptive skills, and who is currently, or was formerly eligible for special education or related services under the IDEA. The Department recognizes that disabilities other than mental retardation, such as certain forms of autism and traumatic brain injury, may be considered intellectual disabilities. Under § 668.233(c), a student with an intellectual disability is eligible to receive Federal Pell, FSEOG, and FWS program assistance under subpart O of part 668 (Financial Assistance for Students with Intellectual Disabilities) if the institution that offers the eligible comprehensive transition and postsecondary program obtains a record from a local educational agency (LEA) that the student is or was eligible for special education and related services under the IDEA. This section clarifies that if that record does not specifically identify the student as having an intellectual disability, the institution must review all documentation obtained, such as a documented comprehensive and individualized psycho-educational evaluation and diagnosis of an intellectual disability by a psychologist or other qualified professional; or a record of the disability from an LEA or State educational agency (SEA), or government agency, such as the Social Security Administration or a vocational rehabilitation agency, that identifies the intellectual disability. Ultimately, the institution determines whether a student meets the definition of a student with an intellectual disability for the purposes of this subpart.

Changes:

None.

Comment:

Many commenters disagreed with the requirement that a student with an intellectual disability must have gone through the formal IDEA eligibility process to be eligible for Title IV, HEA program assistance. They argued that the Conference report indicates that Congress intended to include students who were home-schooled or went to a private school in the definition of a student with an intellectual disability. The commenters further suggested that if the Department maintains its position that only students who have gone through the formal IDEA eligibility process are eligible for Title IV, HEA program assistance, then the Department should issue guidance and alerts to States, LEAs, students, parents, parent training centers, and advocacy organizations, reminding them that the IDEA's Child Find and Free Appropriate Public Education (FAPE) in the Least Restrictive Environment requirements apply to all individuals who are still at an age at which they could receive special education services in their State.

Discussion:

As discussed in the preamble to the NPRM, we interpret the statute as providing that a student who has not gone through the formal IDEA eligibility process does not meet the definition of a student with an intellectual disability. Specifically, section 760(2) states that a student with an intellectual disability means a student who “is currently, or was formerly, eligible for a FAPE under the IDEA.” While the Department does not wish to exclude students who have not gone through this process, we do not believe the statutory language permits the Department to make these students eligible. We encourage students to obtain an IDEA eligibility determination

while they are still age-eligible for IDEA services. The Department will continue to remind States and LEAs of their responsibilities under the IDEA, including under the child find provision in section 612(a)(3), that they locate, identify, and evaluate all children with disabilities residing in the State, including those who are in private schools or are home-schooled.

Changes:

None.

Program Eligibility (§ 668.232)

Comment:

One commenter suggested that, rather than requiring an institution to apply to have a comprehensive transition and postsecondary program for students with intellectual disabilities approved by the Department for Title IV, HEA funding, the Department simply require the institution to provide assurances that it offers a program that meets the criteria of a comprehensive transition and postsecondary program for students with intellectual disabilities. The commenter argued that this would provide a more streamlined application process. The commenter also noted that the HEOA authorizes a new model demonstration program and a coordinating center that will enable the Department to gather information on best practices and to work to develop model accreditation standards for these programs.

Discussion:

The process for adding a comprehensive transition and postsecondary program to the list of eligible programs at an institution should not pose a large burden on institutions, because it will be part of the same process an institution now uses to notify the Department of any new program it seeks to include as an eligible Title IV, HEA program. As far as the model demonstration program and coordination center, the Department has a current National Institute of Disability and Rehabilitation Research center evaluating promising practices in this area.

Changes:

None.

Comment:

One commenter requested that the Department clarify whether only currently existing comprehensive transition and postsecondary programs can be eligible for Department approval under § 668.232. The commenter asked if any comprehensive transition and postsecondary program offered by an institution is an eligible comprehensive transition and postsecondary program.

Discussion:

An institution may submit to the Secretary for approval under § 668.232 a comprehensive transition and postsecondary program that it currently offers or a program that it is ready to implement. The Secretary will consider for approval any comprehensive transition and postsecondary program that meets the definitional requirements in § 668.231(a) for which an institution submits an application in accordance with § 668.232. There are currently no comprehensive transition and postsecondary programs approved by the Department.

Changes:

None.

Comment:

Commenters suggested that we add a new provision in § 668.232 to require an institution to include in its application for approval of a comprehensive transition and postsecondary program, a description of how students with intellectual disabilities are socially and academically integrated into the campus community to the maximum extent possible.

Discussion:

We do not believe that the suggested language is necessary. Section 668.232(a) requires that institutions provide a detailed description of the comprehensive transition and postsecondary program that addresses all of the components of the program, as defined in § 668.231, in their application for approval by the Department. One of those elements, in § 668.231(a)(6), specifies that a comprehensive transition and postsecondary program must provide students with intellectual disabilities opportunities to participate in coursework and other activities with students without disabilities. To comply with these regulations, an institution applying to add an eligible comprehensive transition and postsecondary program must address this element by explaining how its program will ensure that students with intellectual disabilities are integrated socially and academically with students without disabilities.

Changes:

None.

Comment:

One commenter asserted that the concept of a program is different in special education than it is in higher education in that, in the special education context, a program is typically an individualized set of services and supports designed for a single student. This commenter stated that a set of services and supports designed for a single individual student to participate in regular college courses, internships, and the like should constitute a comprehensive transition and postsecondary program. The commenter questioned whether the Department would approve such a comprehensive transition and postsecondary program for a single student, and, if so, whether it would be necessary for each individualized set of services and supports to be approved by the Department as a separate program. The commenter believed that, as long as a basic structure of support is in place for these programs, the services may be individualized to meet the needs of a single student or a group of students and that the institution should only be required to apply once for the “basic” program structure, and then be able to offer individual variations of the program as needed to individuals without having to reapply for program eligibility for each version of the program.

Discussion:

In general, an institution must demonstrate in its application that its comprehensive transition and postsecondary program satisfies the definitional criteria in § 668.231(a). An institution may have one, or more than one, comprehensive transition and postsecondary program. A program may be for only one student or for a group of students, but each program must be approved by the Department. To be clear, the Department will not approve a generalized structure that can later be modified by the institution to be a different program for specific students. That said, once a program is approved, it can be modified slightly for different students. For example, a program approved under § 668.231 may require a specific number and type of courses, along with other program requirements, but that does not mean that each student in that program will take exactly the same courses. Much like the variation in any student's curriculum that results from individual choices in elective coursework and required academic areas within a program, individual students enrolled in an approved comprehensive transition and postsecondary program may end up taking some different courses. All such courses must be part of the same approved program or part of a separately approved program.

Changes:

None.

Comment:

One commenter suggested that if a student with an intellectual disability is dually enrolled in an LEA and in a comprehensive transition and postsecondary program, then the State Accrediting Agency, SEA, and other stakeholders should have input into the accrediting process of the comprehensive transition and postsecondary program.

Discussion:

The Department is not requiring programmatic accreditation as a condition for approving a comprehensive transition and postsecondary program. Under § 668.232(e), the institution is required to inform its institutional accrediting agency of its comprehensive transition and postsecondary program if the

institution applies to have that program approved by the Department as an eligible program for Title IV, HEA program purposes. The accrediting agency determines what it does with that information.

Changes:

None.

Comment:

One commenter asked how accreditation status was determined when an institution and a non-profit agency share responsibility for providing and operating a comprehensive transition and postsecondary program through a formal memorandum of agreement. The commenter suggested that the accreditation status of the non-profit agency should be considered in the accreditation of the program. Further, under a situation such as this, the commenter requested clarification as to whether Title IV, HEA program assistance could be applied toward the costs for services and fees provided by both the institution and the non-profit agency.

Discussion:

Only an institution participating in the Title IV, HEA programs may offer an eligible

comprehensive transition and postsecondary program,

as that term is defined in § 668.231(a). For this reason, the Department will take into account only the institution's accreditation status in approving a comprehensive transition and postsecondary program. The accreditation of the non-profit agency would not have an impact on the eligibility of the program. Under § 668.5, an eligible institution may contract out a portion of the eligible program through a written arrangement with another eligible institution, an ineligible institution, or an ineligible organization to provide the educational program. Section 668.5(c)(3) of the regulations specifies that—

(1) The ineligible institution or organization may not provide more than 25 percent of the educational program; or

(2) The ineligible institution or organization may provide more than 25 percent but not more than 50 percent of the educational program, as long as—

(a) The eligible institution and ineligible institution or organization are not owned, or controlled by the same individual, partnership, or corporation; and

(b) The eligible institution's accrediting agency, or if the institution is a public postsecondary vocational educational institution, the State agency listed in the

Federal Register

in accordance with 34 CFR part 603, has specifically determined that the institution's arrangement meets the agency's standards for the contracting out of educational services.

In terms of funding, the amount of Title IV, HEA program assistance that a student may receive for enrollment in a comprehensive transition and postsecondary program is based on the student's need, which is defined in section 471 of the HEA as the cost of attendance minus the student's expected family contribution minus any estimated financial assistance received by the student. Need-based aid that a student receives may be used toward any costs in the student's cost of attendance, including those incurred through parts of the program that have been contracted out to a non-profit agency or other institution or organization through a written arrangement with the eligible institution that offers the program.

Changes:

None.

Student Eligibility (§ 668.233)

Comment:

One commenter questioned whether a student with an intellectual disability would be disqualified from receiving Title IV, HEA program assistance if he or she has a legal guardian.

Discussion:

Having a legal guardian would not preclude a student with an intellectual disability from receiving Federal student aid funds. It may, however, affect the student's dependency status, which is taken into account in determining a student's financial need. Therefore, having a legal guardian may affect the amount of financial aid funds for which the student may be eligible.

Changes:

None.

Comment:

Several commenters asked for clarification on whether a high school student who receives special education and related services can also be enrolled in a comprehensive transition and postsecondary program.

Discussion:

It is the Department's longstanding position that a student with a disability may be dually enrolled in secondary school and a postsecondary institution, although such dual enrollment precludes the student from being eligible for Title IV, HEA aid.

The provisions in section 612(a)(2) of the IDEA and 34 CFR 300.110 require States to ensure that public agencies take steps to ensure that children with disabilities have access to the same program options that are available to nondisabled children in the area served by the agency. This would apply to dual enrollment programs in postsecondary or community-based settings. However, we do not believe that the IDEA, or its implementing regulations, requires public agencies to provide dual enrollment programs in postsecondary or community-based settings for students with disabilities, if such programs are not available to secondary school students without disabilities. In a State that offers dual enrollment programs to secondary school students, a high school student with an intellectual disability, as defined under § 668.231(b), who is receiving special education and related services may be dually enrolled in an eligible comprehensive transition and postsecondary program under § 668.232.

Changes:

None.

Comment:

Several commenters expressed concern regarding the provision of special education and related services to a student with an intellectual disability who is dually enrolled in secondary school and a comprehensive transition and postsecondary program. The commenters asked whether the LEA would pay for the comprehensive transition and postsecondary program or whether the student with an intellectual disability would apply for Federal Pell, FSEOG and FWS program assistance.

Discussion:

Under section 612(a)(1) of the IDEA and 34 CFR 300.101, each State and its LEAs must make FAPE available to all children with specified disabilities residing in the State, in mandatory age ranges. Under 34 CFR 300.17(c) of the regulations implementing Part B of the IDEA, FAPE includes an appropriate preschool, elementary school, or secondary school education in the State involved. Under the IDEA, LEAs are not required to provide FAPE in postsecondary education settings. In general, Part B, IDEA funds could be used for appropriate education services included in an IEP that are provided outside of a public or private elementary or secondary school though, if, under State law, the education would be considered secondary school education.

A student with an intellectual disability is eligible to receive Federal Pell Grant, FSEOG, and FWS program assistance under § 668.233 if the student satisfies the general student eligibility requirements under § 668.32, except for paragraphs (a), (e), and (f) of that section. Section 668.32(b) states that a student is not eligible to receive Federal Pell Grant, FSEOG, or FWS program assistance if he or she is enrolled in elementary or secondary school. In other words, if a student is dually enrolled in a secondary school and an eligible comprehensive transition and postsecondary program, he or she is not eligible for Federal Pell, FSEOG, and FWS program assistance. Therefore,

while an LEA could use Part B, IDEA funds to support a dually enrolled student with a disability's participation in a comprehensive transition and postsecondary program if the services the student received in that program were considered secondary school education under State law and were included in the student's IEP, the student would not be eligible to apply for Federal Pell Grant, FSEOG, and FWS program assistance. The Department will monitor the establishment of these comprehensive transition and postsecondary programs, and may consider at some point in the future using the Secretary's waiver authority under the statute to permit qualifying students who are dually enrolled in these programs to also receive Federal Pell Grant, FSEOG, and FWS program assistance. If the Department were to adopt such an approach, we would provide additional information concerning the procedures and availability of any such waivers at that time.

Changes:

None.

Comment:

A few commenters requested that the regulations clarify whether the LEA is responsible for monitoring the progress of a student who is dually enrolled in a secondary school and a comprehensive transition and postsecondary program.

Discussion:

If a student with an intellectual disability who is dually enrolled in a comprehensive transition and postsecondary program receives services in that program that are considered secondary education in the State and are included in the student's IEP, the SEA or LEA must monitor the student's progress toward annual academic and functional goals, because those entities are responsible, under the IDEA, for ensuring that the services identified in the student's IEP are provided. Additionally, eligible comprehensive transition and postsecondary programs, which operate through institutions, must meet the program requirements in § 668.232, including establishing a policy for determining whether a student enrolled in the comprehensive transition and postsecondary program is making satisfactory academic progress. In all cases, the Department encourages the SEA or LEA and the institution offering the comprehensive transition and postsecondary program to enter into a formal agreement of understanding that identifies what the SEA or LEA will provide to the dually-enrolled student, and what the institution will provide to meet the requirements of an eligible comprehensive transition and postsecondary program, and how the student's progress will be assessed. Furthermore, section 612(a)(12) of the IDEA and its implementing regulations at 34 CFR 300.154 require States to develop and implement interagency agreements or other written mechanisms for interagency coordination to ensure that services necessary to provide FAPE to children with disabilities within the State that are provided or paid for by other public agencies are provided or paid for. These provisions mean that if public agencies of a State operate comprehensive transition and postsecondary programs that dually enroll students who are covered by the IDEA to provide services included in the students' IEPs, the State must ensure that interagency agreements or other written mechanisms meeting these requirements are in place.

Changes:

None.

Comment:

A few commenters requested that the Department clarify the interaction between the receipt of Title IV, HEA aid and other benefits that the student may receive, such as Medicaid or vocational rehabilitation funding. Specifically, commenters expressed concern that a student's receipt of Medicaid benefits or other benefits may be disrupted due to the student's receipt of Federal Pell Grant, FSEOG, or FWS program assistance.

Discussion:

These final regulations implement provisions of the HEA only. They do not attempt to address any overlap between the protections and requirements of the State Medicaid program under Title XIX of the Social Security Act. Additional information concerning eligibility requirements for other programs may be sought from the agency responsible for implementing those programs.

With respect to financial aid available to students under the HEA, a student's financial aid assistance may be affected by aid received under other programs, such as Medicaid. While a student's Federal Pell Grant award would not be reduced based on any other aid received, the amount of FSEOG and FWS program assistance for which a student is eligible is based, in part, on the student's total estimated financial assistance (EFA), as defined in § 673.5(c). A student's FSEOG and FWS awards, when combined with the student's other EFA, may not exceed the student's financial need. Therefore, a student's FSEOG and FWS awards may be affected by other aid the student receives.

Changes:

None.

Comment:

Several commenters expressed concern regarding the use of a student's summary of academic and functional performance to meet the requirements under § 668.233(c). Commenters stated that a student's summary of academic and functional performance should not serve as acceptable documentation to establish that the student has an intellectual disability.

Discussion:

To better prepare for the student's enrollment in a comprehensive transition and postsecondary program, the Department encourages institutions to consider using a student's summary of academic achievement and functional performance (SOP) as described in 34 CFR 300.305(e)(3). That said, the Department recommends that institutions use the SOP only as supplemental information under § 668.233(c).

Section 300.305(e)(3) of the implementing regulations of the IDEA, consistent with section 614(c)(5)(B)(ii) of the IDEA, states that the summary required when a child graduates with a regular diploma or exceeds the age eligibility under State law must include information about the child's academic achievement and functional performance, as well as recommendations on how to assist the child in meeting the child's postsecondary goals. The Department believes that this supplemental information would provide the institution with a better understanding of a student's abilities and limitations in determining an appropriate comprehensive transition and postsecondary program for the student.

Changes:

None.

Comment:

A few commenters expressed concern that a student's documentation from an SEA under § 668.233(c) might not include terms such as “intellectual disability” or “mental retardation” and, therefore, may not be useful in establishing eligibility as student with an intellectual disability. One commenter stated that, in its school district, a student's IEP does not include a disability category. The commenter asked how a student's eligibility in this situation would be determined and whether the school district would have to complete an evaluation that states that the student has an intellectual disability. Another commenter asked if a student would need to have a specific diagnosis of intellectual disability to be eligible.

Discussion:

The issue raised by these comments is similar to the one addressed in response to comments on § 668.231(b). Section 668.233(c) requires that an institution obtain a record from an LEA that the student is or was eligible for special education and related services under the IDEA, and if

the record does not identify the student as having an intellectual disability, documentation establishing that the student has an intellectual disability. The Department recognizes that documentation from an LEA (an IEP or transition plan, for example) may not state that a student has an intellectual disability. The Department believes that § 668.233(c)(1) and (c)(2) addresses this issue, by requiring the institution to review all documentation obtained to establish that the student has an intellectual disability. Nothing in these provisions, however, requires LEAs to perform or pay for evaluations that they do not need for purposes of meeting requirements of the IDEA.

Changes:

None.

Comment:

A few commenters suggested that, whenever possible, existing documentation from school records or other sources, such as previous evaluations conducted by qualified professionals from public agencies, be used to determine that the student has an intellectual disability, and that the process for making this determination should be minimally burdensome for students, families, and institutions.

Discussion:

During negotiated rulemaking, some negotiators expressed concern that institutions would require updated evaluations that could be costly or cost prohibitive. In the preamble to the NPRM, the Department stated that an institution, as the party responsible for determining students' eligibility for the Federal Pell, FSEOG, and FWS programs, would be allowed to accept the most recent documentation, even if it is more than a few years old. To further clarify, we do not believe it is appropriate to require in these regulations that the documentation submitted by the student have a minimum or maximum age, as long as the information used is the best available under the circumstances. Under § 668.233(c), if the record from the LEA does not state that the student has an intellectual disability, the institution also would have to obtain documentation to establish that the student has an intellectual disability, as defined under § 668.231(b).

Changes:

None.

Part 690 Federal Pell Grant Program

Two Federal Pell Grants in an Award Year (§§ 690.67, 690.64, and 690.63(h))

Student Eligibility for a Second Scheduled Award (§ 690.67)

Comments:

Several commenters agreed with the proposed regulations that would amend § 690.67(a)(1) to provide that a student would be eligible for a second Scheduled Award if the student has earned in an award year at a minimum the credit or clock hours of the first academic year of the student's eligible program. However, a significant number of commenters objected to the proposed regulations as they would apply to term-based programs. In general, the commenters were concerned that the regulations would unduly limit the benefits to students of two Federal Pell Grants in an award year, would be overly complex and burdensome for institutions to administer, and would create confusion for students due to uncertainty in determining the students' Federal Pell Grants and due to the different eligibility requirements for a second Scheduled Award. The commenters also believed that enabling an individual student to enroll in additional coursework during an award year should be considered acceleration without reference to the program's length. Some commenters proposed that eligibility for payments be determined based on previous eligibility used and without reference to completion of the credit hours of an academic year. Some commenters proposed, as an alternative, for the Department to require that a student successfully complete the hours for which the Federal Pell Grant was paid to qualify for the second Scheduled Award.

One commenter was concerned that the requirements would adversely affect students taking noncredit and reduced credit remedial coursework.

Several commenters questioned the Department's concern that the satisfactory academic progress standards in 34 CFR 668.16(e), as well as the new limitation under section 401(c)(5) of the HEA that a student's lifetime eligibility is limited to nine Scheduled Awards if a student receives a Federal Pell Grant for the first time on or after July 1, 2008, did not provide sufficient minimum standards for ensuring a student's advancement in his or her eligible program. Two commenters recommended revising the satisfactory academic progress requirements as an alternative to the proposed regulations.

Discussion:

We agree that the proposed regulations might unduly limit a Federal Pell Grant-eligible student's ability to meet the costs of attending additional courses that would enable the student in an award year to accelerate his or her progress toward program completion and that the final regulations should not impede such acceleration. In addition, we agree that the proposed regulations could be considered complex and burdensome for some institutions to administer. We agree, in principle, with the recommendations of some commenters that payment should be tied to successful completion of the credit or clock hours for which a student has received Federal Pell Grant payments. Based on these comments, we believe it would be appropriate to require that, for a student to be eligible for payments from a second Scheduled Award in an award year, the student must be enrolled in credit or clock hours that were attributable to the student's second academic year. A student in a term-based program would cease to be eligible for a payment from the second Scheduled Award if the student ceased to be enrolled in the credit hours attributable to the second Scheduled Award prior to the date for any recalculation for changes in enrollment status required by the institution's recalculation policies established under § 690.80(b).

The eligibility requirements for a second Scheduled Award in an award year must be different from those for a first award, in that section 401(b)(5)(A)(i) of the HEA requires enrollment on at least a half-time basis to receive a second Scheduled Award. This difference may be disconcerting to some students. However, we believe that students will be able to understand these requirements.

We do not believe the regulations would adversely affect a student enrolled in noncredit or reduced-credit remedial coursework. The student's remedial coursework would be considered in accordance with the requirements for determining equivalence to full-credit coursework under 34 CFR 668.20 when determining the student's eligibility for a second Scheduled Award in an award year.

We do not agree with the commenters concerning the efficacy of the current satisfactory academic progress standards and the new lifetime limit of nine Scheduled Awards in providing a sufficient basis for encouraging a student to accelerate program completion. Some institutions have adopted reasonable standards of satisfactory academic progress that would address our concerns. Others have used the flexibilities and options in the current regulations to fashion institutional standards that may meet the letter of the requirements in 34 CFR 668.16(e) but in our view allow students who are not progressing satisfactorily to continue to receive title IV aid. Because of this variability and our belief that the new lifetime limit for Federal Pell Grants does not provide sufficient encouragement to accelerate program completion, we do not agree with the

suggestions that a payment of a second Scheduled Award may be made without reference to a student's completion of the first academic year in an award year. Further, we believe that relying on current satisfactory progress standards would not be in accord with the student achievement and accountability principles for using additional funds appropriated for Federal Pell Grants under the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5). We agree with the commenters who recommended that we consider revising the satisfactory academic progress standards and have included this issue as a likely topic in the negotiated rulemaking on program integrity issues that is scheduled to commence on November 2, 2009. Information on this new negotiated rulemaking was published in the

Federal Register

on May 26, 2009 (74 FR 24728) and September 9, 2009 (74 FR 46399), respectively.

Changes:

We are revising § 690.67(a)(1) to provide that an institution participating in the Federal Pell Grant Program shall award a payment of a second Scheduled Award to a student in an award year if an otherwise eligible student is enrolled for credit or clock hours that are attributable to the student's second academic year in the award year. As a result of this change, we are also making conforming changes in § 690.67(c) for special circumstances in determining whether a student may qualify for a second Scheduled Award and in § 690.64 as discussed under the heading “Payment Period in Two Award Years (§ 690.64).”

Transfer Students (§ 690.67(b))

Comments:

One commenter supported § 690.67(b) as a straightforward treatment of transfer students. Another believed no provision was needed for transfer students if the Secretary ceased to require that eligibility for payment from a second Scheduled Award be based on completing the hours of the first academic year. One commenter cited examples where the provisions in § 690.67(b) would result in inequitable treatment between continuously enrolled and transfer students. Another commenter believed that we should provide an “hours-earned” method as an option under which an institution with the necessary information may determine the credits or clock hours earned in the award year at other institutions that would be applicable to completing the first academic year. The commenter believed that there should also be a limitation on the need to recalculate a student's eligibility based on the receipt of information subsequent to disbursements of a second Scheduled Award. Some commenters believed that the determination of a transfer student's credit or clock hours should be based on the percentage of the student's Scheduled Award used at the prior institution.

Discussion:

Based on the Department's revision of § 690.67(a)(1), determining a transfer student's credit or clock hours toward completion of the first academic year in an award year is still required. During negotiated rulemaking, the non-Federal negotiators noted that determination of the actual credits or clock hours earned at other institutions would be burdensome to the institution into which a student transfers and generally would be administratively difficult. To perform a determination of the actual credit or clock hours earned at other institutions, an institution would need to have the necessary information to determine whether credit or clock hours were earned in the current award year, regardless of whether the institution accepted them on transfer. The institution would also be required to resolve ambiguities such as whether the credit or clock hours of a summer payment period were considered earned in the current award year or whether credit or clock hours in a transcript were nonapplicable hours based on Advanced Placement (AP) programs, International Baccalaureate (IB) programs, testing out, life experience, or similar competency measures.

While we recognized that there will be some inequities in applying the assumption method in § 690.67(b), we continue to believe that this method is appropriate for evaluating a transfer student's eligibility when the alternative would be administratively burdensome to an institution. However, we also agree with the commenter who recommended that, if an institution chooses to do so, it may use an hours-earned method to determine the actual credit or clock hours earned at other institutions during the award year.

Under § 690.67(b)(2) an institution that chooses to use the assumption method must determine the credit or clock hours that a transfer student has earned at a prior institution during the award year based on the Federal Pell Grant disbursements that the student received at the prior institution during the award year in relation to the student's Scheduled Award at that prior institution. These same proportions are used to calculate the percentage of Scheduled Award used by a student. Following the provisions of § 690.67(b)(2) would yield a more accurate determination of the credit or clock hours considered to be transferred than merely applying the percentage of Scheduled Award used.

We agree with the concern regarding the receipt of additional information regarding a student's payments at other institutions subsequent to determining the student's eligibility for a second Scheduled Award and agree that some limitation on requiring a recalculation of prior payments would be appropriate. An institution may correctly make a determination of a student's eligibility for a second Scheduled Award for a prior payment period based on the information available at that time. We do not believe it is necessary to impose the burden of requiring the institution to adjust a determination for a prior payment period that was correctly made during that prior payment period. However, we believe it is appropriate to provide that the institution may, at its option, revise the student's eligibility for a prior payment based the receipt of additional information.

Changes:

We are revising § 690.67(b) to provide that an institution may, on an individual student basis, use an hours-earned method for determining a student's credit or clock hours earned at other institutions in an award year as an alternative to the assumption method. We are also clarifying that an institution may, but is not required to, recalculate a student's payment in a prior payment period in an award year if the institution receives information that would change the student's eligibility for a second Scheduled Award in the prior payment period. The institution would be required to take into consideration the new information in determining eligibility for the current payment period if that payment period is in the same award year.

Nonapplicable Credit or Clock Hours (§ 690.67(d))

Comment:

One commenter did not support excluding the AP, IB, testing out, life experience, or similar competency measures in determining a student's eligibility for a second Scheduled Award. The commenter believed that the exclusion would be burdensome to administer.

Discussion:

We do not agree with the commenter. A student's eligibility for a second Scheduled Award is based, in part, on the student's progress in earning the credits or clock hours of the first academic year in the award year. We continue to believe that this provision ensures that only those credits or clock hours earned in the award year are considered in determining the

student's eligibility. While the provision may create some burden, it is essential to making a valid determination of a student's eligibility for a second Scheduled Award.

Changes:

None.

Payment Period in Two Award Years (§ 690.64)

Comments:

Several commenters supported the concept of requiring that a payment period scheduled to occur in two award years, a “crossover” payment period, be assigned to the award year in which the student would receive the greater payment for the payment period. A significant number of commenters believed these requirements would be administratively difficult to administer. Several commenters believed that the financial aid administrator should continue to have the discretion to assign a “crossover” payment period to either award year and should not be required to assign a crossover payment period to the award year in which the student would receive the greater payment for the payment period. The commenters also believed that a financial aid administrator should not be required to reassign the crossover payment period if subsequent information is received that would lead to a higher Federal Pell Grant for a student as required in § 690.64 in the case of students enrolled on at least a three-quarter-time basis. One commenter believed that these requirements mandated that a student must file a Free Application for Federal Student Aid (FAFSA) for a crossover payment period. One commenter believed that a deadline should be established for being required to make reassignments of crossover payment periods.

Several commenters believed that the determination of the higher payment should be made only at the time the Federal Pell Grant is initially awarded or packaged. Some commenters were concerned that increasing a crossover payment would necessitate cancelling all or a portion of a student's loan. One commenter believed the increased payments would lead to overpayments in Federal Work-Study (FWS) assistance. The commenters believed these adjustments in the students' awards would confuse students. Some commenters were concerned that requiring that the crossover payment period be in the second award year would adversely affect a student's eligibility for loans since the institution would be required to place the crossover payment period in the second award year for purposes of awarding FFEL and Direct Loans. Two commenters stated that the award year placement of a student's Federal Pell Grant may adversely affect the amount of the student's State grant aid. Commenters were also concerned that institutions would delay disbursement to students eligible for a higher payment from the second award year until Federal funds were available on July 1 for that year. One of these commenters noted that State law prohibited an institution from advancing funds not yet received. The commenter proposed that, if necessary due to State law, an institution should be allowed to disburse funds at the beginning of a crossover payment period from the first award year to a student eligible for a higher payment form the second award year and then make the necessary adjustments after July 1 to provide the higher payment from the second award year. The commenter believed that this process would ensure funds are available to the student at the start of the payment period but ultimately yield the greater payment. One commenter questioned whether the results of verifying application information could lead to a reassignment of the payment period and adversely affect a student. Several commenters recommended that if a payment must be assigned to the subsequent award year, the Federal Pell Grant should be considered disbursed for purposes of the return of title IV funds under 34 CFR 668.22 even when the student withdraws prior to July 1.

Discussion:

We continue to believe that a crossover payment period should be assigned in a way that maximizes a student's eligibility for that payment period even if this causes some administrative difficulties. The Department would consider an institution that delays disbursing funds from the second award year until July 1 of that year, to be in compliance with these requirements if the institution disbursed funds at the beginning of the crossover payment period from the first award year to a student eligible for a higher payment from the second award year and then made the necessary adjustments after July 1 to provide the higher payment from the second award year as soon as funds were available on July 1. There is no requirement that a student submit a FAFSA for both award years to receive payment for a crossover payment period. We believe these benefits will be understood and appreciated by students. Further, with the changes made by the Department in these final regulations to § 690.67(a)(1), assigning a crossover payment period to the subsequent award year would generally no longer adversely impact a student's ability to establish eligibility for a second Scheduled Award in that subsequent year.

Contrary to the concerns expressed by some commenters, one of the major additional benefits for students of this requirement in § 690.64 is a reduction in student borrowing. The increase in the student's Federal Pell Grant payment would increase the student's estimated financial assistance and thus reduce the student's need for loan funds for the payment period. Also, while it is unlikely that a combination of an increased Federal Pell Grant payment and FWS would result in a need to reduce the FWS award as one commenter indicated, no overaward for earnings from work would be created in the very limited cases in which a student may need to have FWS assistance canceled.

We do not agree with the commenters who were concerned that requiring that the crossover payment period in the second award year would adversely affect a student's eligibility for loans. The commenters believed that the institution would be required to place the crossover payment period in the new award year for purposes of awarding FFEL and Direct Loans. Under the requirements of the Title IV, HEA programs, the award year assignment of a student's Federal Pell Grant has no affect on the award year assignment of the student's other Federal student assistance, including loans. The amount of the Federal Pell Grant is estimated financial assistance for determining the need in the other programs. Institutions should ensure that their information technology systems provide for this necessary flexibility to ensure that students receive appropriate assistance in each award year. System requirements should not be the basis for limiting the assistance for which a student is eligible.

We agree with the commenters that, in some limited instances under the current award regulations for State grant programs, a student's State grant may be reduced because of an increase in the student's Federal Pell Grant. We do not believe that we should use these limited circumstances as the basis for denying a student a higher Federal Pell Grant crossover payment. We believe that the States can make the necessary adjustments to their programs to maximize the overall aid available to these needy students.

We do not agree that a reassignment of the payment period as a result of verification of application information would adversely affect a student. If, as a result of verification of application information, a student's EFC and Federal Pell Grant eligibility changes for

an award year, that result would be taken into consideration in assigning a student's crossover payment. If, for example, the crossover payment period were assigned to the first award year because it yielded the maximum Federal Pell Grant payment but verification of application information resulted in a lower EFC and increased Federal Pell Grant eligibility for the second award year, the crossover payment period would be reassigned to the second award year.

With regard to the return of title IV funds, a disbursement for the subsequent award year may be made prior to July 1 using institutional funds rather than waiting to disburse when the subsequent award year Federal funds become available on July 1. Also, notwithstanding whether an institution chooses to make such a disbursement, the return of title IV funds takes into consideration both funds that were disbursed as well as funds that could have been disbursed.

Based on these comments, we will establish deadlines specifically for these determinations through publication of a

Federal Register

notice. We will clarify the deadline when the receipt of information would require reassignment for a higher crossover payment and a deadline for a subsequent period when the receipt of information would support, but not require, an institution to make reassignments for a higher crossover payment. We expect to set the initial deadline based on the last date for submitting Student Aid Reports or Institutional Student Information Records for the first award year or a similar date as appropriate. During the subsequent period of time prior to the second deadline, an institution may establish such policies concerning reassignment of the crossover payment period as it determines best meet the needs of its students and the institution.

Changes:

We are revising proposed § 690.64(b) to require that, regardless of a student's enrollment status, the crossover payment period must be assigned to the award year in which the student would receive the greater payment for the payment period at the time the student's Federal Pell Grant is initially calculated. We are also clarifying the deadlines by which an institution must take into account any information that changes a student's payment by providing that an institution must make a reassignment to the award year providing the greater payment based on any additional information received by a deadline that the Secretary establishes through publication in the

Federal Register

for each award year. We are further providing that an institution may make, but is not required to make, a reassignment if additional information is received after the date established for required reassignments and not later than the deadline date for the first award year for administrative relief based on unusual circumstances that the Secretary establishes through publication in the

Federal Register

for each award year.

We are also removing proposed § 690.64(a)(2) and (c). Section 690.64(a)(2) provided that a student may request a determination concerning the assignment of a crossover payment period, and § 690.64(c) required the assignment of a payment period with more than six months scheduled to occur within one award year to be assigned to that award year. These proposed provisions are no longer relevant under these revised requirements.

Part 692—Leveraging Educational Assistance Partnership Program Grants for Access and Persistence Program (Subpart C of Part 692 Consisting of §§ 692.90 Through 692.130)

Recruiting Eligible Students (§ 692.101(b)(2))

Comment:

One commenter was concerned that early information and intervention, mentoring, or outreach programs (early intervention programs) are integral to the GAP Program, and the commenter believed that it would be difficult to identify students participating in early intervention programs who would be eligible for a LEAP Grant under GAP. The commenter believed that under current privacy laws identifying students who have participated in an eligible early intervention program and matching them with their FAFSA submissions and then with a GAP-participating postsecondary institution would appear to be impossible. The commenter questioned whether these requirements could be redefined to indicate that if the State partners with itself or another organization to provide early intervention programs at a particular high school that anyone who graduates with that high school cohort would be considered a “participating student.” The commenter believed this definition would remove the requirement of having to have personally identifiable information for each participant. The commenter also noted that additional guidelines would be needed for home-schooled students or those who participate in an early intervention program through a non-school-based program.

Discussion:

To the extent that the privacy provisions of FERPA (34 CFR part 99) apply to the particular circumstances of a State agency and other GAP participants in the State, the Department will provide technical assistance on any issues raised by the applicability of FERPA on a case-by-case basis.

Changes:

None.

Executive Order 12866

1. Regulatory Impact Analysis

Under Executive Order 12866, the Secretary must determine whether the regulatory action is “significant” and therefore subject to the requirements of the Executive Order and subject to review by the OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may (1) have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities in a material way (also referred to as an “economically significant” rule); (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order.

Pursuant to the terms of the Executive order, it has been determined this regulatory action will have an annual effect on the economy of more than $100 million. Therefore, this action is “economically significant” and subject to OMB review under section 3(f)(1) of Executive Order 12866. Therefore, the Secretary has assessed the potential costs and benefits of this regulatory action and has determined that the benefits justify the costs.

Need for Federal Regulatory Action

As discussed in the NPRM, these regulations are needed to implement provisions of the HEA, as amended by the HEOA, related to changes to the Federal grant and work-study programs, campus safety, educational programs for students with intellectual disabilities, peer-to-peer file sharing and copyright infringement, teach-outs, readmission of servicemembers, and non-title IV revenue.

Regulatory Alternatives Considered

Regulatory alternatives were considered as part of the rulemaking process. These alternatives were reviewed in detail in the preamble to the NPRM under both the

Regulatory Impact Analysis

and the

Reasons

sections accompanying the discussion to each regulatory provision. To the extent that they were addressed in response to comments received on the NPRM, alternatives are also considered elsewhere in this preamble to the final regulations under the

Discussions

sections related to each provision. No comments were received related to the

Regulatory Impact Analysis

discussion of these alternatives.

As discussed above in the

Analysis of Comments and Changes

section, these final regulations reflect specific HEOA requirements, in many cases using language drawn directly from the statute, and minor revisions in response to public comments. In most cases, these revisions were technical in nature and intended to address drafting issues or to provide additional clarity. None of these changes result in revisions to cost estimates prepared for and discussed in the

Regulatory Impact Analysis

of the NPRM.

Benefits

As discussed in the NPRM, benefits provided in these regulations include greater transparency about consumer information and campus safety for prospective and current students at institutions participating in the Federal student financial assistance programs, copyright infringement policies, requirements for readmission of servicemembers, explanation of extenuating circumstances under which TEACH Grant service obligations may be excused, requirements for programs serving students with intellectual disabilities, and additional guidelines for Federal grant and work-study programs. It is difficult to quantify benefits related to the new institutional requirements, as there is little specific data available on consumers' use of such information and the effect of the other provisions. In the NPRM, the Department requested comments or data that would support a more rigorous analysis of the impact of these provisions. No comments or additional data were received.

Benefits under these regulations flow directly from statutory changes included in the HEOA; they are not materially affected by discretionary choices exercised by the Department in developing these regulations, or by changes made in response to comments on the NPRM. As noted in the

Regulatory Impact Analysis

in the NPRM, these provisions result in net costs to the government $1,644 million over years 2010-2014.

Costs

As discussed extensively in the

Regulatory Impact Analysis

of the NPRM, many of the statutory provisions implemented though these regulations will require regulated entities to develop new disclosures and other materials, as well as accompanying dissemination processes. In total, these changes are estimated to increase burden on entities or individuals participating in the Federal student assistance programs by 253,718 hours. Virtually all this increased burden is associated with institutions, with 80 percent related to two provisions: peer-to-peer file sharing and the award of two Pell Grants in a single award year. An extremely small amount—384 hours—is associated with students. The monetized cost of this additional burden, using loaded wage data developed by the Bureau of Labor Statistics, is $4.7 million.

Given the limited availability of data underlying these burden estimates, in the NPRM the Department requested comments and supporting information for use in developing more robust estimates. In particular, we asked institutions to provide detailed data on actual staffing and system costs associated with implementing these regulations, especially the provisions related to peer-to-peer file sharing and administering two Pell Grants in one year. No comments or additional data were provided.

Net Budget Impacts

HEOA provisions implemented by these regulations are estimated to have a net budget impact of $297.4 million in 2010 and $1.6 billion over FY 2011-2014. Consistent with the requirements of the Credit Reform Act of 1990, budget cost estimates for the student loan programs reflect the estimated net present value of all future non-administrative Federal costs associated with a cohort of loans. A cohort reflects all loans originated in a given fiscal year.

The budgetary impact of the regulations is entirely driven by statutory changes involving the provision of two Pell Grants in a single award year. The Department estimates almost no budgetary impact for other provisions included in these regulations. There is no data indicating that the extensive new requirements for disclosures for student loan program participants will have any impact on the volume or composition of Federal student loans.

Assumptions, Limitations, and Data Sources

As noted in the NPRM, because these regulations largely restate statutory requirements that would be self-implementing in the absence of regulatory action, impact estimates provided in the preceding section reflect a pre-statutory baseline in which the HEOA changes implemented in these regulations do not exist. Costs have been quantified for five years. In developing these estimates, a wide range of data sources were used, including data fr

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