**Issue #1:** Consistent enrollment status definitions for all Title IV
programs

**Regulatory Cite:** §668.2(b); §668.10(a)(3)(v); §668.10(a)(3)(vi);
§674.2(b); §682.200; §685.102; §690.2(c)

**Summary of Change:** Definitions for full-time student, half-time
student, and three-quarter time student were updated as needed,
consolidated, and moved to §668.2(b). More specifically, the definition
for a full-time student in a clock hour program was updated to reflect
the new academic year definition, which changed the minimum number of
weeks of instructional time from 30 to 26. In order for a full-time
clock hour student to meet the required 900 hours by the end of the
minimum 26 weeks, a student must now complete 35 hours of instructional
time per week instead of 24. Additionally, a definition of full-time for
a student who is taking some correspondence coursework has been added to
the general definitions. References to these terms in §668.10(a)(3)(v),
668.10(a)(3)(vi), §674.2(b), §682.200, §685.102, §690.2(c), §690.8(c),
and §691.8(c) have been removed.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.2(b) General Definitions.

\* \* \* \* \*

*Full-time student:* An enrolled student who is carrying a full-time
academic workload as determined by the institution under a standard
applicable to all students enrolled in a particular educational program.
The student\'s workload may include any combination of courses, work,
research, or special studies that the institution considers sufficient
to classify the student as a full-time student. However, for an
undergraduate student, an institution\'s minimum standard must equal or
exceed one of the following minimum requirements:

\(1\) For a program that measures progress in credit hours and uses
standard terms (semesters, trimesters, or quarters), 12 semester hours
or 12 quarter hours per academic term.

\(2\) For a program that measures progress in credit hours and does not
use terms, 24 semester hours or 36 quarter hours over the weeks of
instructional time in the academic year, or the prorated equivalent if
the program is less than one academic year.

\(3\) For a program that measures progress in credit hours and uses
nonstandard terms (terms other than semesters, trimesters or quarters)
the number of credits determined by:

\(i\) Dividing the number of weeks of instructional time in the term by
the number of weeks of instructional time in the program\'s academic
year; and

\(ii\) Multiplying the fraction determined under (b)(3)(i) of this
section by the number of credit hours in the program\'s academic year.

\(4\) For a program that measures progress in clock hours, the clock
hours per week as determined by dividing the clock hours in the
program's academic year by the weeks of instructional time in the
program's academic year.

\(5\) A series of courses or seminars that equals 12 semester hours or
12 quarter hours in a maximum of 18 weeks.

\(6\) The work portion of a cooperative education program in which the
amount of work performed is equivalent to the academic workload of a
full-time student.

\(7\) For correspondence coursework, a full-time courseload must be\--

\(i\) Commensurate with the full-time definitions listed in paragraphs
(1) through (6) of this section; and

\(ii\) At least one-half of the coursework must be made up of
non-correspondence coursework that meets one-half of institution's
requirement for full-time students.

\* \* \* \* \*

*Half-time student:* (1) Except as provided in paragraph (2), an
enrolled student who is carrying a half-time academic work load, as
determined by the institution, that amounts to at least half the work
load of the applicable minimum requirement outlined in the definition of
a full-time student.

\(2\) A student enrolled solely in a program of study by correspondence
who is carrying a work load of at least 15 hours of work per week, or is
earning at least 6 credit hours per semester, trimester or quarter.
However, regardless of the work, no student enrolled solely in
correspondence study is considered more than a half-time student.

\* \* \* \* \*

*Three-quarter time student:* An enrolled student who is carrying a
three-quarter-time academic work load, as determined by the institution,
that amounts to at least three quarters of the work of the applicable
minimum requirement outlined in the definition of a full-time student.

*\* \* \* \* \**

\[The definitions that have been added to the General Provisions
regulations will be listed in each part, as appropriate, with the terms
used in that part that are set forth in subpart A of the Student
Assistance General Provisions, 34 CFR 668.\]

**Issue #2:** Consistent definitions for undergraduate student, graduate
or professional student and first-professional degree for all Title IV
programs

**Regulatory Cite:** §674.2(b); §675.2(b); §676.2(b); §682.200; §690.2;
§691.2

**Summary of Change:** Definitions for undergraduate and graduate or
professional student were consolidated and moved to §668.2(b).
References to these terms in §674.2(b), §675.2(b), §676.2(b), §682.200,
§690.2, and §691.2 have been removed. Language was added to the
definition of undergraduate student to clarify that any student who is
enrolled in a dual degree program (bachelor's and higher) is considered
an undergraduate student for purposes of Federal student aid for his/her
first three academic years in the program. A definition for first
professional degree was added to §668.2(b) to clarify that designation.
It is based on the definition of first professional degree used by the
Integrated Postsecondary Education Data System (IPEDS).

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.2(b) General definitions.

\* \* \* \* \*

*First professional degree:* A degree that signifies both completion of
the academic requirements for beginning practice in a given profession
and a level of professional skill beyond that normally required for a
bachelor's degree. Professional licensure is also generally required.
Examples of a first professional degree include but are not limited to
Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), and Veterinary
Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B., J.D.),
Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry
(D.P.M., D.P., or Pod.D.), and Theology (M.Div., M.H.L.).

\* \* \* \* \*

*Graduate or professional student:* A student who:

\(1\) Is enrolled in a program or course above the baccalaureate level
at an institution of higher education or is enrolled in a program
leading to a first professional degree;

\(2\) Has completed the equivalent of at least three years of full-time
study at an institution of higher education, either prior to entrance
into the program or as part of the program itself; and

\(3\) Is not receiving title IV aid as an undergraduate student for the
same period of enrollment.

\* \* \* \* \*

*Undergraduate student:*

\(1\) A student who is enrolled in an undergraduate course of study that
usually does not exceed four academic years, or is enrolled in a longer
program designed to lead to a first degree at the baccalaureate level.

\(2\) In addition to meeting the definition in paragraph (1), a student
is only considered an undergraduate for purposes of the Federal
Supplemental Educational Opportunity Grant (FSEOG) Program, the Federal
Pell Grant Program, the Academic Competitiveness Grant (ACG) Program,
and National Science and Mathematics Access to Retain Talent (SMART)
Grant Program if the student has not yet earned a baccalaureate or first
professional degree.

\(3\) For purposes of dual degree programs that allow individuals to
complete a bachelor's degree and either a graduate or first professional
degree within the same program, a student is considered an undergraduate
student for at least the first three academic years of that program.

\* \* \* \* \*

\[The definitions that have been added to the General Provisions
regulations will be listed in each part, as appropriate, with the terms
used in that part that are set forth in subpart A of the Student
Assistance General Provisions, 34 CFR 668.\]

**Issue #3:** Define independent study

**Regulatory Cite:** §600.2; §668.10(a)(3)(iii)

**Summary of Change:** A definition of independent study will be added
to §668.2(b).

**Tentative Agreement:** Not fully discussed yet

**Change:**

§668.2(b) General Definitions.

\* \* \* \* \*

*Independent study:* A course of study in which:

\(1\) An individual student works with a faculty member to design a
unique course or program of study tailored to that student's academic
objectives and interests, or

\(2\) For purposes of direct assessment programs, a student follows a
course of study with predefined objectives but works with a faculty
member to decide how the student is going to meet those objectives; and

\(3\) For both (1) and (2) of this definition, the student and faculty
member agree on what the student will do (e.g., required readings,
research, and work products), how the student's work will be evaluated,
and on what the relative timeframe for completion of the work will be.
The student must interact with the faculty member on a regular and
substantive basis to track progress within the course or program.

\* \* \* \* \*

**Issue #4:** Nonterm credit hour programs\--Use of completion of half
the weeks of instructional time for timing of loan disbursements.

**Regulatory Cite:** §668.4, §668.164(b)(1), §682.604(c)(6), (c)(7), and
(c)(8), §685.301(b)(2), (b)(3), (b)(5), and (b)(6), §674.16(b),
§676.16(a), §690.76, §691.76

**Summary of change:** The definition of a payment period has been
changed to make the payment period definition the same for all Title IV
grant and loan programs, except where prohibited by law and regulation
(i.e., for nonstandard term programs using terms that are not
substantially equal in length). This has been accomplished by: (1)
applying the requirement that a student complete half the coursework and
half the weeks of instructional time, rather than the use of completion
of half the coursework and the calendar midpoint as currently used in
the FFEL and Direct Loan program, for the timing of second disbursements
to students in nonterm credit hour programs, and nonstandard term credit
hour programs with terms that are not substantially equal in length; (2)
requiring the completion of half the weeks instructional time in
addition to half the clock hours in the payment period, before a second
disbursement may be made to a student in a clock hour program to be
consistent with current requirements for FFEL and Direct Loan funds and
(3) for credit hour nonterm and clock hour programs, requiring two
payment periods for any remainder of a program that is one academic year
or less in length to be consistent with current requirements for FFEL
and Direct Loan funds. Finally, a change to §668.22 has been made to
require an institution to select and consistently use either the
FFEL/Direct Loan payment period or the Title IV grants/Perkins loan
payment period for Return of Title IV Funds calculations for a program
that is measured in nonstandard terms that are not substantially equal
in length. Aid that is not disbursed by the selected payment period must
be attributed.

**Tentative Agreement:** Not fully discussed yet.

####### **Change:** 

####### §668.4 Payment period.

\(a\) *Payment periods for an eligible program that measures progress in
credit hours and uses standard terms or nonstandard terms that are
substantially equal in length.* For a student enrolled in an eligible
program that measures progress in credit hours and uses standard terms
(semesters, trimesters, or quarters), or for a student enrolled in an
eligible program that measures progress in credit hours and uses
nonstandard terms that are substantially equal in length**,** the
payment period is the academic term.

\(b\) *Payment periods for an eligible program that measures progress in
credit hours and uses nonstandard terms that are not substantially equal
in length.* For a student enrolled in an eligible program that measures
progress in credit hours and uses nonstandard terms that are not
substantially equal in length---

\(1\) For Pell Grant, ACG, National SMART Grant, FSEOG, and Perkins Loan
program funds, the payment period is the academic term.

\(2\) For FFEL and Direct Loan program funds---

\(i\) For a student enrolled in an eligible program that is one academic
year or less in length or for the remaining portion of an eligible
program that is one academic year or less in length---

\(A\) The first payment period is the period of time in which the
student successfully completes half the number of credit hours in the
program or remainder of the program, as applicable, and half the number
of weeks of instructional time in the program or remainder of the
program, as applicable; and

\(B\) The second payment period is the period of time in which the
student successfully completes the program or remainder of the program,
as applicable.

\(ii\) For a student enrolled in an eligible program that is more than
one academic year in length---

\(A\) For the first academic year and any subsequent full academic
year---

\(1\) The first payment period is the period of time in which the
student successfully completes half the number of credit hours in the
academic year and half the number of weeks of instructional time in the
academic year; and

\(2\) The second payment period is the period of time in which the
student successfully completes the academic year.

\(c\) *Payment periods for an eligible program that measures progress in
credit hours and does not have academic terms or clock hours.* (1) For a
student enrolled in an eligible program that is one academic year or
less in length or for the remaining portion of an eligible program that
is one academic year or less in length---

\(i\) The first payment period is the period of time in which the
student successfully completes half the number of credit hours or clock
hours, as applicable, in the program or remainder of the program and
half the number of weeks of instructional time in the program or
remainder of the program; and

\(ii\) The second payment period is the period of time in which the
student successfully completes the program or the remainder of the
program.

\(2\) For a student enrolled in an eligible program that is more than
one academic year in length---

\(i\) For the first academic year and any subsequent full academic
year---

\(A\) The first payment period is the period of time in which the
student successfully completes half the number of credit hours or clock
hours, as applicable, in the academic year and half the number of weeks
of instructional time in the academic year; and

\(B\) The second payment period is the period of time in which the
student successfully completes the academic year.

\(3\) For purposes of paragraphs (c)(1) and (c)(2) of this section, if
an institution is unable to determine when a student has successfully
completed half of the credit hours in a program, academic year, or
remainder of a program, the student is considered to begin the second
payment period of the program, academic year, or remainder of a program
at the later of the date, as determined by the institution, on which the
student has successfully completed---

\(i\) Half of the academic coursework in the program, academic year, or
remainder of the program; or

\(ii\) Half the number of weeks of instructional time in the program,
academic year, or remainder of the program.

\(d\) \[**change to current paragraph (d) discussed under "Require
institutions to use consistent disbursement periods for Title IV
programs, where allowed under the law"**\]

\(e\) *Re-entry within 180 days.* If a student withdraws from a program
described in paragraph (c) or (d) of this section during a payment
period and then reenters the same program within 180 days, the student
remains in that same payment period when he or she returns and, subject
to conditions established by the Secretary or by the FFEL lender or
guaranty agency, is eligible to receive any title IV, HEA program funds
for which he or she was eligible prior to withdrawal, including funds
that were returned by the institution or student under the provisions of
§668.22.

\(f\) *Re-entry after 180 days or transfer.*

\* \* \* \* \*

\(2\) For a student described in paragraph (f)(1) of this section---

\(i\) For the purpose of calculating payment periods only, the length of
the program is the number of credit hours and the number of weeks of
instructional time, or the number of clock hours and the number of weeks
of instructional time, that the student has remaining in the program he
or she enters or reenters; and

\(ii\) If the remaining hours and weeks constitute one-half of an
academic year or less, the remaining hours constitute one payment
period.

####### (g) *Terms substantially equal in length.* For purposes of this section, terms are substantially equal in length if no term in the program is more than two weeks of instructional time longer than any other term in that program.

####### §682.604 Processing the borrower\'s loan proceeds and counseling borrowers**.**

\* \* \* \* \*

(c)\* \* \*

\(6\) Unless the provision of §682.207(d) apply, if a loan period is
more than one payment period, the school must deliver loan proceeds at
least once in each payment period.

####### §685.301 Origination of a loan by a Direct Loan Program school.

\(b\) \* \* \*

\* \* \* \* \*

\(2\) An institution must disburse the loan proceeds on a payment period
basis in accordance with 34 CFR 668.164(b).

\(3\) Unless paragraph (b)(4) of this section applies, if a loan period
is more than one payment period, the school must disburse loan proceeds
at least once in each payment period.

(renumber as necessary)

####### §668.22 Treatment of title IV funds when a student withdraws.

\* \* \* \* \*

\(e\) \* \* \*

\(5\) *Use of payment period or period of enrollment.* (i) The treatment
of title IV grant or loan funds if a student withdraws must be
determined on a payment period basis for a student who attended a
standard term-based (semester, trimester, or quarter) educational
program.

(ii)(A) The treatment of title IV grant or loan funds if a student
withdraws may be determined on either a payment period basis or a period
of enrollment basis for a student who attended a non-term based
educational program or a nonstandard term-based educational program.

\(B\) An institution must consistently use either a payment period or
period of enrollment for all purposes of this section for each of the
following categories of students who withdraw from the same non-term
based or nonstandard term-based educational program:

(*1*) Students who have attended an educational program at the
institution from the beginning of the payment period or period of
enrollment.

(*2*) Students who re-enter the institution during a payment period or
period of enrollment.

(*3*) Students who transfer into the institution during a payment period
or period of enrollment.

\(iii\) For a program that measures progress in credit hours and uses
nonstandard terms that are not substantially equal in length, if the
institution uses the payment period to determine the treatment of title
IV grant or loan funds for a category of students found in paragraph
(e)(5)(ii)(B) of this section, for students who are disbursed or could
have been disbursed aid using both the payment period definition in
§668.4(b)(1) and the payment period definition in §668.4(b)(2), the
institution must---

\(A\) Consistently use for calculations under this section for all such
students in the category----

(*1*) The payment period definition in §668.4(b)(1); or

(*2*) The payment period definition in §668.4(b)(2); and

\(B\) Attribute the title IV, HEA program assistance that is disbursed
by the payment period that is not used for the calculation.

**Issue #5:** Determining loan eligibility for nonstandard term programs

**Regulatory Cite:** §682.603, §685.301

**Summary of Change:** A student must successfully complete an academic
year to progress to the next FFEL or Direct Loan annual loan limit. For
a standard term based program, a student progresses to the next loan
limit if he or she completes an academic year in calendar time. This
change permits a student to progress to the next annual loan limit in a
nonstandard term based program also based on calendar time only, if the
terms in the program are substantially equal in length and are at least
9 weeks in length.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§682.603 Certification by a participating school in connection with a
loan application.

\* \* \* \* \*

(g)(1) If a school measures academic progress in an educational program
in credit hours and uses either standard terms (semesters, trimesters,
or quarters) or nonstandard terms that are substantially equal in
length, and each term is at least 9 weeks of instructional time in
length, a student is considered to have completed an academic year and
progresses to the next annual loan limit when the academic year calendar
period has elapsed.

\(2\) If a school measures academic progress in an educational program
in nonstandard terms that are not substantially equal in length, or in
credit hours and does not have academic terms, a student is considered
to have completed an academic year and progresses to the next annual
loan limit at the later of---

\(i\) The student's completion of the weeks of instructional time in the
student's academic year; or

\(ii\) The date, as determined by the school, that the student has
successfully completed the academic coursework in the student's academic
year.

\(3\) If a school measures academic progress in an educational program
in clock hours, a student is considered to have completed an academic
year and progresses to the next annual loan limit at the later of---

\(i\) The student's completion of the weeks of instructional time in the
student's academic year; or

\(ii\) The date, as determined by the school, that the student has
successfully completed the clock hours in the student's academic year.

\(4\) For purposes of paragraphs (g)(1) and (g)(2) of this section,
terms in a loan period are substantially equal in length if no term in
the loan period is more than two weeks of instructional time longer than
any other term in that loan period.

Current (g)-(i) become (h)-(j).

\* \* \* \* \*

####### §685.301 Origination of a loan by a Direct Loan Program school.

\* \* \* \* \*

\(c\) *Annual loan limit progression based on completion of an academic
year.* (1) If a school measures academic progress in an educational
program in credit hours and uses either standard terms (semesters,
trimesters, or quarters) or nonstandard terms that are substantially
equal in length, and each term is at least 9 weeks of instructional time
in length, a student is considered to have completed an academic year
and progresses to the next annual loan limit when the academic year
calendar period has elapsed.

\(2\) If a school measures academic progress in an educational program
in nonstandard terms that are not substantially equal in length, or in
credit hours and does not have academic terms, a student is considered
to have completed an academic year and progresses to the next annual
loan limit at the later of---

\(i\) The student's completion of the weeks of instructional time in the
student's academic year; or

\(ii\) The date, as determined by the school, that the student has
successfully completed the academic coursework in the student's academic
year.

\(3\) If a school measures academic progress in an educational program
in clock hours, a student is considered to have completed an academic
year and progresses to the next annual loan limit at the later of---

\(i\) The student's completion of the weeks of instructional time in the
student's academic year; or

\(ii\) The date, as determined by the school, that the student has
successfully completed the clock hours in the student's academic year.

\(4\) For purposes of paragraphs (c)(1) and (c)(2) of this section,
terms in a loan period are substantially equal in length if no term in
the loan period is more than two weeks of instructional time longer than
any other term in that loan period.

Current (c) and (d) become (d) and (e).

\* \* \* \* \*

**Issue #6:** Require institutions to use consistent disbursement
periods for Title IV programs, where allowed under the law

**Regulatory Cite:** §668.4, §668.164(b)(1), §668.22(e)(5), §674.16(b),
§676.16(a), §682.604(c)(6), (c)(7), and (c)(8), §685.301(b)(2), (b)(3),
(b)(5), and (b)(6).

**Summary of Change:** The changes made to the definition of a payment
period (discussed under "Nonterm credit hour programs\--Use of
completion of half the weeks of instructional time for timing of loan
disbursements") would establish consistent payment periods for all Title
IV grant and loan programs, except programs that measure progress in
credit hours with nonstandard terms that are not substantially equal in
length, as the statute and regulations require the use of different
payment periods for these programs. To ensure consistency, §668.4 would
be amended further to no longer permit an institution to have more than
two payment periods in an academic year/program.

For example, for a clock hour program of 900 hours, an institution would
be required to disburse Title IV grant and Perkins Loan funds using two
450 hour payment periods.

We note that under §690.76 and §691.76, an institution may pay a student
Pell Grant, ACG and/or National SMART Grant funds at such times and in
such installments in each payment period as it determines will best meet
the student's needs. Corresponding provisions for Perkins Loan and FSEOG
funds are found in §674.16(b), §676.16(a) respectively. So, for example,
an institution could make two Pell Grant payments within each payment
period for a total of four Pell Grant payments for the program.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

####### §668.4 Payment period.

\* \* \* \* \*

Paragraph (d) is deleted.

**Issue #7:** Recovery of funds not claimed by student or parent.

**Regulatory cite:** §668.161(b)

**Summary of Change:** Establishes a timeframe for returning unclaimed
funds to the Department or FFEL lender.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.161 Scope and purpose.

\* \* \* \* \*

\(b\) *Federal interest in title IV, HEA program funds.* (1) Funds
received by an institution under the title IV, HEA programs are held in
trust for the intended student beneficiary, the Secretary, or lender or
a guaranty agency under the FFEL programs. The institution, as a trustee
of Federal funds, may not use or hypothecate (i.e., use as collateral)
title IV, HEA program funds for any other purpose, except for program
administrative expenses authorized by the Secretary and funds used for
the Job Location and Development Program under the FWS Programs.

\(2\) Notwithstanding any State law, an institution must return
immediately to the Secretary, lender, or guaranty agency, as applicable,
any title IV, HEA program funds that it disbursed by issuing a check or
initiating an electronic funds transfer (EFT) if\--

\(i\) No later than 180 days after the date the check was issued, the
check is not negotiated by the beneficiary; or

\(ii\) The check or EFT is returned undeliverable. However, for a failed
EFT the institution must attempt to disburse the funds one more time by
issuing a check.

**Issue #8 and #9:** Electronic disbursements, use of stored-value
cards, and issuing a check.

**Regulatory cite:** §668.164(c) and §668.165(b)

**Summary of Change:** Removes the Title IV requirement that an
institution must first obtain a student's authorization to make an
electronic funds transfer (EFT), but adds a provision reminding the
institution that it must comply with the E-Sign Act and State Law
regarding electronic transactions. Modifies the date that a check is
issued and conditions the use of EFT, particularly where the institution
opens, or is active in opening, bank accounts (including stored-value
cards) on behalf of students.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.164 Disbursing funds**.**

\* \* \* \* \*

\(c\) *Direct payments.* An institution is responsible for making direct
payments to students or parents within all applicable timeframes,
including the timeframes established for credit balances under paragraph
(e) of this section, funds the institution receives under the advance
payment method as provided in §668.162(b), and post-withdrawal
disbursements in §668.22(a)(5). An institution pays a student or parent
directly by---

\(1\) Issuing a check or other instrument payable to and requiring the
endorsement or certification of the student or parent. An institution
issues a check, or releases a check provided by a lender under an FFEL
Program, on the date it hands over the check, or mails the check, to the
student or parent;

\(2\) Initiating an EFT to the student's or parent's bank account. If
the bank account is opened at the request or direction of the
institution, or opened by the institution on behalf of the student or
parent, the institution must\--

\(i\) Ensure that the bank account is FDIC insured;

\(ii\) Not make any claims against the funds in the account without the
written permission of the student or parent, except for correcting an
error in transferring the funds in accordance with banking protocols;

\(iii\) Ensure that its process for opening the account complies with
applicable State Law regarding electronic transactions and the
Electronic Signatures in Global and National Commerce Act (Public Law
106-229), as amended, particularly with the consent and consumer
protection provisions contained in those laws;

\(iv\) Ensure that the student or parent does not incur any cost in
opening the account or initially receiving any type of debit card,
stored-value card, other type of ATM card, or similar transaction device
that is used to access electronically the funds in that account;

\(v\) Ensure that the student has convenient access to a branch office
of the bank or automated teller machines (ATMs) of the bank in which the
account was opened, and the student does not incur any cost in making
cash withdraws from that office or ATM;

\(v\) Ensure that the debit, stored-value or ATM card, or other device
can be widely used, e.g., the institution may not limit the use of the
card or device to particular vendors;

\(vi\) May not market or portray the account, card, or device as a
credit card or credit instrument, or subsequently convert the account,
card, or device to a credit card or credit instrument; and

\(vii\) Before the account is opened, must inform the student or parent
of the terms and conditions associated with accepting and using the
account, card, or device; or

\(3\) Dispensing cash for which an institution obtains a signed receipt
from the student or parent.

A conforming change would be made in §668.165(b)(1) by deleting
paragraph (i), which now requires an institution to get a student's
permission to disburse funds to his or her bank account.

**Issue #10:** Late, late disbursements.

**Regulatory cite:** §668.164(g)(4)

**Summary of Change:** Removes the late, late disbursement provisions.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.164 Disbursing funds.

\* \* \* \* \*

\(g\) *Late disbursements*.

\* \* \*

\(4\) *Limitations*. (i) An institution may not make a late disbursement
later than 120 days after the date of the institution's determination
that the student withdrew, as provided in §668.22, or, for a student who
did not withdraw, 120 days after the date the student otherwise becomes
ineligible.

\(ii\) Renumber the rest of the section.

**Issue #11:** Affirmative confirmation of a loan.

**Regulatory cite:** §668.165(a)

**Summary of Change:** For each award year, requires an institution to
obtain written confirmation from a student that she wants the loans
included in her aid package.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.165 Notices and authorizations

\(a\) *Notices.* (1) For any award year, an institution must notify a
student of the amount of funds that the student or his or her parent can
expect to receive under each title IV, HEA program, and how and when
those funds will be disbursed. If those funds include Direct Loan or
FFEL Program funds, the notice must indicate which funds are from
subsidized loans and which are from unsubsidized loans.

\(i\) Before the institution disburses a loan under any title IV, HEA
program, as part of the notice in paragraph (a)(1) of this section or
under another process, it must receive written confirmation from the
student that he or she accepts the loan; and

\(ii\) Before the institution disburses any grant under the title IV,
HEA programs or pays a student any FWS wages, the institution must send
the notice described in paragraph (a)(1) of this section to the student.

**Issue #12:** Definition of excess cash and excess cash allowances.

**Regulatory cite:** §668.166(a) and (b)

**Summary of Change:** Modifies the definition of excess cash to include
any Title IV funds received from the Department that an institution
deposits or transfers into its Federal account. Eliminates the excess
cash tolerances.

**Tentative Agreement:** Not fully discussed yet

**Change:**

§668.166 Excess cash.

\(a\) *General*. (1) The Secretary considers excess cash to be any
amount of title IV, HEA program funds, other than Federal Perkins Loan
Program funds, that an institution does not disburse to students or
parents by the end of the third business day following the date the
institution\--

\(i\) Received those funds from the Secretary; or

\(ii\) Deposited or transferred to its Federal account previously
disbursed title IV, HEA program funds received from the Secretary such
as those resulting from award adjustments, recoveries, or cancellations.

\(2\) An institution must return promptly to the Secretary any amount of
excess cash in its account or accounts.

Paragraph (b), Excess cash tolerances, is deleted.

**Issue #13**: Treatment of FFEL and Direct Loan funds when a student
withdraws before beginning class---make consistent with other programs

**Regulatory Cite**: §668.21, §682.604(d)(3) and (4), §682.207,
§685.303(b)(3)

**Summary of Change**: To simplify and consolidate the requirements for
the treatment of Title IV funds when a student does not begin
attendance, this change would require that FFEL and Direct Loan funds be
treated in the same manner as the current treatment for Title IV grant
and Perkins Loan funds. That is, an institution would be responsible for
returning any FFEL and Direct Loan funds that are disbursed to a student
before the student begins attendance, even if those funds were disbursed
directly to the student. In addition, this change would establish a
30-day timeframe for the return of funds and specify when a return is
considered to have been made in a timely manner. The timely return
specifications are the same as those currently found in §668.173, which
are used for returns made in accordance with the Return of Title IV
Funds requirements in §668.22. Institutions would not be responsible for
returning loan funds that are disbursed directly to the student by the
lender.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

####### §668.21  Treatment of title IV grant and loan funds if the recipient does not begin attendance.

(a)(1) If a student does not begin attendance in a payment period or
period of enrollment, the institution must return all title IV, HEA
program funds that were credited to the student's account at the
institution or disbursed directly to the student.

\(2\) The institution shall return those funds to the respective title
IV, HEA programs as soon as possible, but no later than 30 days after
the date that the institution becomes aware that the student will not or
has not begun attendance.

\(b\) For purposes of this section, the Secretary considers that a
student has not begun attendance in a payment period or period of
enrollment if the institution is unable to document the student\'s
attendance at any class during the payment period or period of
enrollment.

\(c\) In accordance with procedures established by the Secretary or FFEL
Program lender, an institution returns title IV, HEA funds timely if---

\(1\) The institution deposits or transfers the funds into the bank
account it maintains under §668.163 no later than 30 days after the date
that the institution becomes aware that the student will not or has not
begun attendance;

\(2\) The institution initiates an electronic funds transfer (EFT) no
later than 30 days after the date that the institution becomes aware
that the student will not or has not begun attendance;

\(3\) The institution initiates an electronic transaction, no later than
30 days after the date that the institution becomes aware that the
student will not or has not begun attendance, that informs a FFEL lender
to adjust the borrower\'s loan account for the amount returned; or

\(4\) The institution issues a check no later than 30 days after the
date that the institution becomes aware that the student will not or has
not begun attendance. An institution does not satisfy this requirement
if---

\(i\) The institution\'s records show that the check was issued more
than 30 days after the date that the institution becomes aware that the
student will not or has not begun attendance; or

\(ii\) The date on the cancelled check shows that the bank used by the
Secretary or FFEL Program lender endorsed that check more than 45 days
after the date that the institution becomes aware that the student will
not or has not begun attendance.

\(d\) Notwithstanding paragraph (a) of this section, for a disbursement
of FFEL Stafford loan funds made directly by the lender in accordance
with §682.207(b)(1)(v)(C) and (D) to a student who does not begin
attendance---

\(1\) The institution is not responsible for returning the funds, but
must immediately notify the lender when it becomes aware that the
student will not or has not begun attendance; and

\(2\) The lender must issue a final demand letter to the borrower in
accordance with §682.412.

\* \* \* \* \*

####### §682.604 Processing the borrower\'s loan proceeds and counseling borrowers.

(d)\* \* \*

\* \* \* \* \*

\(3\) If a student does not begin attendance in the period of
enrollment, disbursed loan proceeds must be handled in accordance with
§668.21 and §682.607.

\* \* \* \* \*

####### §682.607 *Payment of a return of title IV, HEA program funds to a lender for a student who does not begin attendance or withdraws*. G*eneral.* By applying for a FFEL loan, a borrower authorizes the school to pay directly to the lender that portion of a return of title IV, HEA program funds from the school required under §668.21 or §668.22, as applicable, that is allocable to the loan if the borrower does not begin attendance or withdraws. A school---

\(a\) Must pay that portion of the student\'s return of title IV, HEA
program funds that is allocable to a FFEL loan to---

\(1\) The original lender; or

\(2\) A subsequent holder, if the loan has been transferred and the
school knows the new holder\'s identity; and

\(b\) Must provide simultaneous written notice to the borrower if the
school makes a payment of a return of FFEL program funds to a lender on
behalf of that student.

§685.303 Processing loan proceeds.

\* \* \* \* \*

\(b\) \* \* \*

\* \* \* \* \*

\(3\) If a student does not begin attendance in the period of
enrollment, disbursed loan proceeds must be handled in accordance with
§668.21.

**Issue #14:** Single disbursement provision for Perkins and FSEOG.

**Regulatory cite:** §674.16(g) and §676.16(e)

**Summary of Change:** Eliminates the provision in both programs.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§674.16 Making and disbursing loans.

\* \* \* \* \*

Paragraph (g) is deleted.

§676.16 Payment of an FSEOG.

\* \* \* \* \*

Paragraph (e) is deleted.

**Issue #15:** Post-withdrawal disbursement

**Regulatory Cite:** 34 CFR 668.22(a)(5)(ii)(B)(2)

**Summary of Change:** Under this change, an institution would no longer
be required to notify and obtain the student's or parent's permission
prior to making a direct disbursement of any grant funds that make up a
post-withdrawal disbursement.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§668.22 Treatment of title IV funds when a student withdraws.

\* \* \* \* \*

(5)(i) A post-withdrawal disbursement must be made from available grant
funds before available loan funds.

(ii)(A) If outstanding charges exist on the student\'s account, the
institution may credit the student\'s account up to the amount of
outstanding charges with all or a portion of any---

(*1*) Grant funds that make up the post-withdrawal disbursement in
accordance with §668.164(d)(1) and (d)(2); and

(*2*) Loan funds that make up the post-withdrawal disbursement in
accordance with §668.164(d)(1), (d)(2) and (d)(3) only after obtaining
confirmation from the student or parent, in the case of a parent PLUS
loan, that they still wish to have the loan funds disbursed in
accordance with paragraph (a)(5)(iii) of this section.

(B)(*1*) The institution must disburse directly to a student any amount
of a post-withdrawal disbursement of grant funds that is not credited to
the student's account as soon as possible, but no later than 30 days
after the date of the institution's determination that the student
withdrew, as defined in paragraph (l)(3) of this section**.**

*(2*) The institution must offer to disburse directly to a student, or
parent in the case of a parent PLUS loan, any amount of a
post-withdrawal disbursement of loan funds that is not credited to the
student\'s account, or for which the institution is not required to
obtain confirmation to credit to the student\'s account, to the student,
or the parent in the case of a parent PLUS loan, in accordance with
paragraph (a)(5)(iii) of this section.

(*3*) The institution must make a direct disbursement of any loan funds
that make up the post-withdrawal disbursement only after obtaining the
student\'s, or parent\'s in the case of a parent PLUS loan, confirmation
that they still wish to have the grant or loan funds disbursed in
accordance with paragraph (a)(5)(iii).

(iii)(A) The institution must provide within 30 days of the date of the
institution\'s determination that the student withdrew, as defined in
paragraph (l)(3) of this section, a written notification to the student,
or parent in the case of parent PLUS loan, that---

(*1*) Requests confirmation of any post-withdrawal disbursement of loan
funds that the institution wishes to credit to the student\'s account in
accordance with paragraph (a)(5)(ii)(A)(*2*), identifying the type and
amount of those loan funds and explaining that a student, or parent in
the case of a parent PLUS loan, may accept or decline some or all of
those funds;

(*2*) Requests confirmation of any post-withdrawal disbursement of loan
funds that the student, or parent in the case of a parent PLUS loan, can
receive as a direct disbursement, identifying the type and amount of
these title IV funds and explaining that the student, or parent in the
case of a parent PLUS loan, may accept or decline some or all of those
funds;

(*3*) Explains that a student, or parent in the case of a parent PLUS
loan, who does not confirm that a post-withdrawal disbursement of loan
funds may be credited to the student\'s account may not receive any of
those loan funds as a direct disbursement unless the institution
concurs;

(*4*) Explains the obligation of the student, or parent in the case of a
parent PLUS loan, to repay any loan funds he or she chooses to have
disbursed; and

(*5*) Advises the student, or parent in the case of a parent PLUS loan,
that no post-withdrawal disbursement of loan funds will be made, unless
the institution chooses to make a post-withdrawal disbursement based on
a late response in accordance with paragraph (a)(5)(iii)(C) of this
section, if the student or parent in the case of a parent PLUS loan,
does not respond within 14 days of the date that the institution sent
the notification, or a later deadline set by the institution.

\(B\) The deadline for a student, or parent in the case of a parent PLUS
loan, to accept a post-withdrawal disbursement under paragraph
(a)(5)(iii)(A)(*4*) must be the same for both a confirmation of a direct
disbursement of the post-withdrawal disbursement of loan funds and a
confirmation of a post-withdrawal disbursement of loan funds to be
credited to the student\'s account;

\(C\) If the student, or parent in the case of a parent PLUS loan,
submits a timely response that confirms that they wish to receive all or
a portion of a direct disbursement of the post-withdrawal disbursement
of loan funds, or confirms that a post-withdrawal disbursement of loan
funds may be credited to the student\'s account, the institution must
disburse the funds in the manner specified by the student, or parent in
the case of a parent PLUS loan, within 120 days of the date of the
institution\'s determination that the student withdrew, as defined in
paragraph (l)(3) of this section.

\(D\) If a student, or parent in the case of a parent PLUS loan, submits
a late response to the institution\'s notice requesting confirmation,
the institution may make the post-withdrawal disbursement of loan funds
as instructed by the student, or parent in the case of a parent PLUS
loan (provided the institution disburses all the funds accepted by the
student, or parent in the case of a parent PLUS loan), or decline to do
so.

\(E\) If a student, or parent in the case of a parent PLUS loan, submits
a late response to the institution and the institution does not choose
to make the post-withdrawal disbursement of loan funds, the institution
must inform the student, or parent in the case of a parent PLUS loan, in
writing of the outcome of the post-withdrawal disbursement request.

\(F\) If the student, or parent in the case of a parent PLUS loan, does
not respond to the institution\'s notice, no portion of the
post-withdrawal disbursement of loan funds that the institution wishes
to credit to the student\'s account, nor any portion that would be
disbursed directly to the student, or parent in the case of a parent
PLUS loan, may be disbursed.

\(iv\) An institution must document in the student\'s file the result of
any notification made in accordance with paragraph (a)(5)(iii) of this
section of the student\'s right to cancel all or a portion of loan funds
or of the student\'s right to accept or decline loan funds, and the
final determination made concerning the disbursement.

**Issue #16:** Calculate Pell Grant payments for programs with standard
terms, but monthly starts

**Regulatory Cite:** §690.63

**Summary of Change:** The change in §690.63 (a) (1) allows Pell Grant
payments for programs with standard terms that have monthly starts to be
calculated in the same manner as programs that have standard terms
without monthly starts.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§690.63 Calculation of a Federal Pell Grant for a payment period.

\* \* \* \* \*

(a)(1) *Programs using standard terms with at least 30 weeks of
instructional time*. A student\'s Federal Pell Grant for a payment
period is calculated under paragraphs (b) or (d) of this section if---

\(i\) The student is enrolled in an eligible program that---

\(A\) Measures progress in credit hours;

\(B\) Is offered in semesters, trimesters, or quarters;

\(C\) Requires the student to enroll for at least 12 credit hours in
each term in the award year to qualify as a full-time student; and

\(ii\) The program uses an academic calendar that provides at least 30
weeks of instructional time in ---

\(A\) Two semesters or trimesters in the fall through the following
spring, or three quarters in the fall, winter, and spring**,** none of
which overlaps any other term (including a summer term) in the program;
or

\(B\) Any two semesters or trimesters, or any three quarters where --

(*1*) The institution starts its terms for different cohorts of students
on a periodic basis (e.g., monthly),

(*2*) The program is offered exclusively in semesters, trimesters, or
quarters, and

(*3*) Students are not allowed to be enrolled simultaneously in
overlapping terms and must stay with the cohort in which they start
unless they withdraw from a term (or skip a term) and re-enroll in a
subsequent term.

\* \* \* \* \*

**Issue #17:** Pro ration for Pell Grant payments for programs using
clock hours or credit hours without terms

**Regulatory Cite:** §690.63

**Summary of Change:** The change in §690.63 (e) will revise the
calculation of Pell Grant payments for programs using clock hours or
credit hours without terms.

**Tentative Agreement:** Not fully discussed yet.

**Change:**

§690.63 Calculation of a Federal Pell Grant for a payment period.

\* \* \* \* \*

\(e\) *Programs using credit hours without terms or clock hours.* (1)
The Federal Pell Grant for a payment period for a student in a program
using credit hours without terms or using clock hours is calculated
by---

\(i\) Determining the student\'s Scheduled Federal Pell Grant using the
Payment Schedule; and

\(ii\) Multiplying the amount determined under paragraph (e)(1)(i) of
this section by the lesser of---

\(A\)

  -----------------------------------------------------------------------
  The number of credit or clock hours in a payment period

  The number of credit or clock hours in the program's academic year
  -----------------------------------------------------------------------

> ; or
>
> \(B\)

+-----------------------------------------------------------------------+
| The number of weeks of instructional time required for a full-time    |
| student to complete the credit or clock hours in the payment period   |
+-----------------------------------------------------------------------+
| > The number of weeks of instructional time in the academic year      |
+-----------------------------------------------------------------------+

\(2\) For purposes of paragraph (e)(1)(ii)(B) of this section, if a
program does not have any full-time students, the institution uses the
full-time standard for the program based on the definition in 34 CFR
668.2 to determine the number of weeks of instructional time required
for a full-time student to complete the credit or clock hours in the
payment period.

**(Perhaps the following only goes in the preamble)**

**For a credit hour program without terms, the use of the full-time
definition will always result in the numerator of the fraction in
paragraph (e)(1)(ii)(B) simply being the number of weeks in the payment
period. For a clock hour program, the use of the full-time definition
will require the school to divide the clock hours in the payment period
by the clock hours that a full-time student takes in a week to determine
the numerator of the fraction, e.g., 450/30 = 15, or 450/35 = 12.8
(13)**

\(3\) For the first payment period in a self-paced program an
institution must use the number of weeks of instructional time required
for a full-time student to complete the credit or clock hours in the
payment period in paragraph (e)(1)(ii)(B) of this section based on the
schedule a typical student would follow, as described in the
institution's catalog, web site, or other publication. For second and
subsequent payment periods in a self-paced program, an institution
determines the number of weeks of instructional time required for a
full-time student to complete the credit or clock hours in the payment
period by extrapolating the time the student will need to complete those
credit or clock hours based on the time it has taken the student to
complete the hours the student has already taken.

**Issue #18:** Minimum period for certifying a loan (including
certifying a loan for a transfer student)

**Regulatory Cite:** §§682.603 and 685.301

**Summary of Change:** The changes in §§682.603 (f) (1) and 685.301 (a)
(9) (i) allow a school to certify or originate a loan for a single term
when the school has terms that are substantially equal in length and at
least 9 weeks long; and also to certify or originate a loan for the
remaining portion of the student's annual loan limit to cover the
portion of an academic year that the student has remaining when the
student transfers to a new school, and then allow the school to certify
or originate a full loan for the next full academic year.

**Tentative Agreement:** Not fully discussed yet

**Change:**

##### §682.603 Certification by a participating school in connection with a loan application.

\* \* \* \* \*

(f)(1) The minimum period of enrollment for which a school may certify a
loan application is\--

\(i\) At a school that measures academic progress in credit hours and
uses a semester, trimester, or quarter system, or has terms that are
substantially equal in length with no term less than 9 weeks in
length**,** a single term (e.g., a semester or quarter), or

\(ii\) Except as provided in paragraph (f)(1)(ii)(C), at a school that
measures academic progress in clock hours, or measures academic progress
in credit hours but does not use a semester, trimester, or quarter
system or does not have terms that are substantially equal in length
with no term less than 9 weeks in length, the lesser of-

\(A\) The length of the student\'s program (or the remaining portion of
that program if the student has less than the full program remaining) at
the school; or

\(B\) The academic year as defined by the school in accordance with 34
CFR 668.3.

\(C\) For a student who transfers into a school with credit or clock
hours from another school, and the current school would be certifying a
loan for a period of enrollment that overlaps the period for which the
prior school certified or originated a loan, the school may certify a
loan for the remaining portion of the student's program or academic
year, whichever is less. In this case the school may certify a loan for
the remaining balance of the student's annual loan limit.

\* \* \* \* \*

§685.301 Origination of a loan by a Direct Loan school

\* \* \* \* \*

(a)(9)(i) The minimum period of enrollment for which a school may
originate a Direct Loan application is\--

\(A\) At a school that measures academic progress in credit hours and
uses a semester, trimester, or quarter system, or has terms that are
substantially equal in length with no term less than 9 weeks in
length**,** a single academic term (e.g., a semester or quarter); or

\(B\) Except as provided in paragraph (a)(9)(i)(C), at a school that
measures academic progress in clock hours, or measures academic progress
in credit hours but does not use a semester, trimester, or quarter
system or does not have terms that are substantially equal in length
with no term less than 9 weeks in length, the lesser of-

(*1*) The length of the student\'s program (or the remaining portion of
that program if the student has less than the full program remaining) at
the school; or

(*2*) The academic year as defined by the school in accordance with 34
CFR 668.3.

\(C\) For a student who transfers into a school with credit or clock
hours from another school, and the current school would be originating a
loan for a period of enrollment that overlaps the period for which the
prior school certified or originated a loan, the school may originate a
loan for the remaining portion of the student's program or academic
year, whichever is less. In this case the school may originate a loan
for the remaining balance of the student's annual loan limit.

**Issue #19:** Minor prior-year expenses.

**Regulatory cite:** §668.164(d)(1)

**Summary of Change:** Allows an institution to use without permission a
student's current-year title IV funds to pay for prior-year charges, as
long as those charges are less than \$100 and are for tuition and fees,
room, or board.

**Tentative Agreement:** Not fully discussed.

**Change:**

§668.164 Disbursing funds.

\* \* \* \* \*

\(d\) *Crediting a student's account at the institution*. (1) Without
obtaining the student's or parent's authorization under §668.165, an
institution may use title IV, HEA program funds to credit a student's
account at the institution to satisfy---

\(i\) Current year charges for tuition and fees;

\(ii\) Current year board charges, if the student contracts with the
institution for board;

\(iii\) Current year room charges, if the student contracts with the
institution for room; and

\(iv\) Prior award year charges for tuition and fees, or room or board
that are less than \$100.

\(2\) After obtaining the appropriate authorization from a student or
parent under §668.165, the institution may use title IV, HEA program
funds to credit a student's account at the institution to satisfy---

\(i\) Current charges that are in addition to the charges described in
paragraph (d)(1) of this section that were incurred by the student at
the institution for educationally related activities; and

\(ii\) Minor prior award year charges if these charges are less than
\$100 or if the payment of these charges does not, and will not, prevent
the student from paying his or her current educational costs.