**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.]{.underline}

\* \* \* \* \*

*Full-time student:* An enrolled student who is carrying a full-time
academic workload ~~(other than by correspondence)~~ 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),]{.underline}
~~Twelve~~[12]{.underline} semester hours or 12 quarter hours per
academic term ~~in an educational program using a semester, trimester,
or quarter system~~.

\(2\) [For a program that measures progress in credit hours and does not
use terms,]{.underline} ~~Twenty-four~~ [24]{.underline} semester hours
or 36 quarter hours [over the weeks of instructional time]{.underline}
~~per~~ [in the]{.underline} academic year~~for an educational program
using credit hours but not using a semester, trimester, or quarter
system~~, or the prorated equivalent ~~for a~~ [if the]{.underline}
program ~~of~~[is]{.underline} 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:]{.underline}

[(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]{.underline}

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

(~~3~~[4]{.underline}) ~~Twenty-four~~[For a program that measures
progress in clock hours, the]{.underline} 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.]{.underline}~~for an educational program that uses clock hours~~

~~(4) In an educational program using both credit and clock hours, any
combination of credit and clock hours where the sum of the following
fractions is equal to or greater than one:~~

\(i\) For a program using a semester, trimester, or quarter system---

  ------------------------------------ ------- -------- ------------------------------
  ~~Number of quarter hours per        ~~+~~            ~~Number of clock hours per
  academic year~~                                       week~~

  ~~36~~                                       ~~24~~   
  ------------------------------------ ------- -------- ------------------------------

\(ii\) For a program not using a semester, trimester, or quarter
system---

  ------------------------- ------- --------------------- ------- -------- ------------------
  ~~Number of semester or   ~~+~~   ~~Number of quarter   ~~+~~            ~~Number of clock
  trimester hours per               hours per academic                     hours per week~~
  academic year~~                   year~~                                 

  ~~24~~                            ~~36~~                        ~~24~~   
  ------------------------- ------- --------------------- ------- -------- ------------------

\(5\) 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
one through six of this section; and]{.underline}

[(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.]{.underline}

\* \* \* \* \*

[*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.]{.underline}

[(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]{.underline} [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.]{.underline}

\* \* \* \* \*

[*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.]{.underline}

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

[§668.10(a)(3)(v)]{.underline}

\* \* \* \* \*

~~A half-time student in a direct assessment program is an enrolled
student who is carrying half of the academic workload of a full-time
student in that program.~~

\* \* \* \* \*

[§668.10(a)(3)(vi)]{.underline}

\* \* \* \* \*

~~A three-quarter-time student in a direct assessment program is an
enrolled student who is carrying three-quarters of the academic workload
of a full-time student in that program.~~

\* \* \* \* \*

[§674.2(b)]{.underline}

\* \* \* \* \*

~~*Half-time graduate or professional student:* An enrolled graduate or
professional student who is carrying a half-time academic workload as
determined by the institution according to its own standards and
practices.~~

~~*Half-time undergraduate student:* An enrolled undergraduate student
who is carrying a half-time academic workload, as determined by the
institution, which amounts to at least half the workload of a full-time
student. However, the institution\'s half-time standards must equal or
exceed the equivalent of one or more of the following minimum
requirements:~~

~~(1) 6 semester hours or 6 quarter hours per academic term for an
institution using a standard semester, trimester, or quarter system.~~

~~(2) 12 semester hours or 18 quarter hours per academic year for an
institution using credit hours to measure progress, but not using a
standard semester, trimester, or quarter system; or the prorated
equivalent for a program of less than one year.~~

~~(3) 12 clock hours per week for an institution using clock hours.~~

~~(4) 12 hours of preparation per week for a student enrolled in a
program of study by correspondence. Regardless of the workload, no
student enrolled solely in correspondence study is considered more than
half-time.~~

\* \* \* \* \*

[§682.200]{.underline}

\* \* \* \* \*

~~*Half-time student.* A student who is enrolled in an institution of
higher education, and is carrying an academic workload that amounts to
at least one-half the workload of a full-time student, as determined by
the school, and is not a full-time student. A student enrolled solely in
an eligible correspondence course, as defined in 34 CFR 668.8 is
considered a half-time student as defined in 34 CFR 668.2.~~

\* \* \* \* \*

[§685.102]{.underline}

\* \* \* \* \*

~~*Half-time student:* A student who is not a full-time student and who
is enrolled in an institution of higher education and is carrying an
academic workload that is at least one-half the workload of a full-time
student, as determined by the school. A student enrolled solely in an
eligible program of study by correspondence is considered a half-time
student.~~

\* \* \* \* \*

[§690.2(c)]{.underline}

\* \* \* \* \*

~~*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---which amounts to at least half the work
load of the appropriate 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 12 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.~~

~~*Less-than-half-time student:* An enrolled student who is carrying
less than half the work load of the appropriate minimum requirement
outlined in the institution\'s definition of a full-time student.~~

~~*Three-quarter-time student:* An enrolled student who is carrying a
three-quarter-time academic work load---as determined by the
institution---which amounts to at least three quarters of the work of
the appropriate minimum requirement outlined in the definition of a
"full-time student" as defined in 34 CFR part 668.~~

\* \* \* \* \*

[§ 691.8(c)]{.underline}

\* \* \* \* \*

~~A student taking correspondence courses is considered a full-time
student if---~~

~~(1) The student is taking coursework that is commensurate with the
institution's standard for full-time students; and~~

~~(2) The student's noncorrespondence coursework constitutes at lease
one-half of the institution's required minimum coursework for full-time
students.~~

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

**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.]{.underline}

\* \* \* \* \*

[*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.).]{.underline}

\* \* \* \* \*

[*Graduate or professional student:* A student who:]{.underline}

[(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;]{.underline}

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

[(3) Is not receiving title IV aid as an undergraduate student for the
same period of enrollment.]{.underline}

\* \* \* \* \*

*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.]{.underline} ~~With the exception of the Federal Family
Educational Loan (FFEL) Program and the Direct Loan program, a student
enrolled in a program of any other length is considered an undergraduate
student for only the first four academic years of that program.~~

[(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)]{.underline} [Grant Program if the student has not yet earned a
baccalaureate or first professional degree.]{.underline}

[(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.]{.underline}

\* \* \* \* \*

[§674.2(b)]{.underline}

\* \* \* \* \*

~~*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:* A student enrolled at an institution of
higher education who is in an undergraduate course of study which
usually does not exceed four academic years, or is enrolled in a four to
five academic year program designed to lead to a first degree. A student
enrolled in a program of any other length is considered an undergraduate
student for only the first four academic years of that program.~~

\* \* \* \* \*

[§676.2(b)]{.underline}

\* \* \* \* \*

~~*Undergraduate student:* A student enrolled in an undergraduate course
of study at an institution of higher education who---~~

~~(1) Has not earned a baccalaureate or first professional degree; and~~

~~(2) Is in an undergraduate course of study which usually does not
exceed 4 academic years, or is enrolled in a 4 to 5 academic year
program designed to lead to a first degree. A student enrolled in a
program of any other length is considered an undergraduate student for
only the first 4 academic years of that program.~~

\* \* \* \* \*

[§682.200]{.underline}

\* \* \* \* \*

~~*Graduate or professional student.* A student who, for a period of
enrollment---~~

~~(1) Is enrolled in a program 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 academic years of
full-time study at an institution of higher education, either before
entrance into the program or as part of the program itself; and~~

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

~~*Undergraduate student.* A student who is enrolled at a school in a
program of study, at or below the baccalaureate level, that usually does
not exceed four academic years, or is up to five academic years in
length, and is designed to lead to a degree or certificate at or below
the baccalaureate level.~~

\* \* \* \* \*

[§690.2]{.underline}

\* \* \* \* \*

~~*Undergraduate student:* A student enrolled in an undergraduate course
of study at an institution of higher education who---~~

~~(1) Has not earned a baccalaureate or first professional degree; and~~

~~(2) Is in an undergraduate course of study which usually does not
exceed 4 academic years, or is enrolled in a 4 to 5 academic year
program designed to lead to a first degree. A student enrolled in a
program of any other length is considered an undergraduate student for
only the first 4 academic years of that program.~~

\* \* \* \* \*

[§691.2]{.underline}

\* \* \* \* \*

~~*Undergraduate student:* A student enrolled in an undergraduate course
of study at an institution of higher education who---~~

~~(1) Has not earned a baccalaureate or first professional degree; and~~

~~(2) Is in an undergraduate course of study which usually does not
exceed 4 academic years, or is enrolled in a 4 to 5 academic year
program designed to lead to a first degree. A student enrolled in a
program of any other length is considered an undergraduate student for
only the first 4 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.]{.underline}

\* \* \* \* \*

[*Independent study:* A course of study in which:]{.underline}

[(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]{.underline}

[(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]{.underline}

[(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.]{.underline}

\* \* \* \* \*

**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]{.underline}, 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.]{.underline}

\(a\) *Payment periods for an eligible program that measures progress in
credit hours and ~~has academic~~ [uses standard]{.underline} terms [or
nonstandard terms that are substantially equal in length.]{.underline}*
For a student enrolled in an eligible program that measures progress in
credit hours and ~~has~~ [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]{.underline}**,** 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]{.underline} [enrolled in an eligible program
that measures progress in credit hours and uses nonstandard terms that
are not substantially equal in length---]{.underline}

[(1) For Pell Grant, ACG, National SMART Grant, FSEOG, and Perkins Loan
program funds, the payment period is the academic term.]{.underline}

[(2) For FFEL and Direct Loan program funds---]{.underline}

[(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---]{.underline}

[(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]{.underline}

[(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.]{.underline}

[(ii) For a student enrolled in an eligible program that is more than
one academic year in length---]{.underline}

[(A) For the first academic year and any subsequent full academic
year---]{.underline}

[(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]{.underline}

[(2]{.underline}) [The second payment period is the period of time in
which the student successfully completes the academic year.]{.underline}

(~~b~~[c]{.underline}) *Payment periods for an eligible program that
measures progress in credit hours and does not have academic terms [or
clock hours]{.underline}.* (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]{.underline}---

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

\(ii\) The second payment period is the period of time in which the
student [successfully]{.underline} 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]{.underline} completes half the number of credit
hours [or clock hours, as applicable,]{.underline} in the academic year
and half the number of weeks [of instructional time]{.underline} in the
academic year; and

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

~~(ii) For any remaining portion of an eligible program that is more
than one-half an academic year but less than a full academic year in
length---~~

~~(A) The first payment period is the period of time in which the
student completes half the number of credit hours in the remaining
portion of the program and half the number of weeks remaining in the
program; and~~

~~(B) The second payment period is the period of time in which the
student completes the remainder of the program.~~

~~(iii) For any remaining portion of an eligible program that is not
more than half an academic year, the payment period is the remainder of
the program.~~

\(3\) For purposes of paragraphs (~~b~~[c]{.underline})(1) and
(~~b~~[c]{.underline})(2) of this section, if an institution is unable
to determine when a student has [successfully]{.underline} completed
half of the credit hours in a program, academic year, or remainder of a
program[,]{.underline}~~;~~ 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---]{.underline}

\(i\) ~~The date, as determined by the institution, on which the student
has completed h~~ [H]{.underline}alf of the academic coursework in the
program, academic year, or remainder of the program; or

\(ii\) ~~The calendar midpoint~~[Half the number of weeks of
instructional time]{.underline}~~between the first and last scheduled
days of class of~~ in the program, academic year, or remainder of the
program.

~~(c) *Payment periods for an eligible program that measures progress in
clock hours.* (1) For a student enrolled in 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 completes half the number of clock hours in the program; and~~

~~(ii) The second payment period is the period of time in which the
student completes 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 completes half the number of clock hours in the academic year;
and~~

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

~~(ii) For any remaining portion of an eligible program that is more
than one-half an academic year but less than a full academic year in
length---~~

~~(A) The first payment period is the period of time in which the
student completes half the number of clock hours in the remaining
portion of the program; and~~

~~(B) The second payment period is the period of time in which the
student completes the remainder of the program.~~

~~(iii) For any remaining portion of an eligible program that is not
more than one half of an academic year, the payment period is the
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 (~~b~~[c]{.underline}) or (~~c~~[d]{.underline})
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]{.underline}, or the number of clock hours [and the
number of weeks of instructional time,]{.underline} that the student has
remaining in the program he or she enters or reenters; and

\(ii\) If the remaining hours~~,~~ and weeks ~~if applicable,~~
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.]{.underline}

####### [§682.604 Processing the borrower\'s loan proceeds and counseling borrowers]{.underline}**.**

\* \* \* \* \*

(c)\* \* \*

\(6\) Unless the provision of §682.207(d) ~~or the provisions of
paragraph (c)(7) of this section~~apply~~---~~

~~(i) [I]{.underline}~~[i]{.underline}f a loan period is more than one
payment period, the school must deliver loan proceeds at least once in
each payment period[.]{.underline}~~; and~~

~~(ii) If a loan period is one payment period, the school must make at
least two deliveries of loan proceeds during that payment period. The
school may not make the second delivery until the calendar midpoint
between the first and last scheduled days of class of the loan period~~.

~~(7)(i) If a school measures academic progress in an educational
program in credit hours and either does not use terms or does not use
terms that are substantially equal in length for a loan period, the
school may not deliver a second disbursement until the later of---~~

~~(A) The calendar midpoint between the first and last scheduled days of
class of the loan period; or~~

~~(B) The date, as determined by the school, that the student has
completed half of the academic coursework in the loan period.~~

~~(ii) For purposes of paragraph (c)(7) 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 longer than any other term in that loan period.~~

~~(8) If an educational program measures academic progress in clock
hours, the school may not deliver a second disbursement until the later
of---~~

~~(i) The calendar midpoint between the first and last scheduled days of
class of the loan period; or~~

~~(ii) The date, as determined by the school, that the student has
completed half of the clock hours in the loan period.~~

####### [§685.301 Origination of a loan by a Direct Loan Program school.]{.underline}

\(b\) \* \* \*

\* \* \* \* \*

\(2\) ~~Unless paragraph (b)(5) or (6) of this section applies,
a[A]{.underline}~~n institution must disburse the loan proceeds on a
payment period basis in accordance with 34 CFR 668.164(b).

\(3\) Unless paragraph (b)(4)~~, (5), (6), or (8)~~ of this section
applies~~---~~

~~(i) [I]{.underline}~~[if]{.underline} a loan period is more than one
payment period, the school must disburse loan proceeds at least once in
each payment period[.]{.underline}~~; and~~

~~(ii) If a loan period is one payment period, the school must make at
least two disbursements during that payment period. The school may not
make the second disbursement until the calendar midpoint between the
first and last scheduled days of class of the loan period~~.

~~(5)(i) If a school measures academic progress in an educational
program in credit hours and either does not use terms or does not use
terms that are substantially equal in length for a loan period, the
school may not make a second disbursement until the later of---~~

~~(A) The calendar midpoint between the first and last scheduled days of
class of in the loan period; or~~

~~(B) The date, as determined by the school, that the student has
completed half of the academic coursework in the loan period.~~

~~(ii) For purposes of this paragraph, terms in a loan period are
substantially equal in length if no term in the loan period is more than
two weeks longer than any other term in that loan period.~~

~~(6) If an educational program measures academic progress in clock
hours, the school may not make a second disbursement until the later
of---~~

~~(i) The calendar midpoint between the first and last scheduled days of
class of in the loan period; or~~

~~(ii) The date, as determined by the institution, that the student has
completed half of the clock hours in the loan period.~~

(renumber as necessary)

####### [§668.22 Treatment of title IV funds when a student withdraws.]{.underline}

\* \* \* \* \*

\(e\) \* \* \*

\(5\) *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---]{.underline}

[(A) Consistently use for calculations under this section for all such
students in the category----]{.underline}

[(*1*) The payment period definition in §668.4(b)(1); or]{.underline}

[(*2*) The payment period definition in §668.4(b)(2); and]{.underline}

[(B) Attribute the title IV, HEA program assistance that is disbursed by
the payment period that is not used for the calculation.]{.underline}

**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.]{.underline}

\* \* \* \* \*

[(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.]{.underline}

[(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---]{.underline}

[(i) The student's completion of the weeks of instructional time in the
student's academic year; or]{.underline}

[(ii) The date, as determined by the school, that the student has
successfully completed the academic coursework in the student's academic
year.]{.underline}

[(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---]{.underline}

[(i) The student's completion of the weeks of instructional time in the
student's academic year; or]{.underline}

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

[(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.]{.underline}

[Current (g)-(i) become (h)-(j).]{.underline}

\* \* \* \* \*

####### §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.]{.underline}

[(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---]{.underline}

[(i) The student's completion of the weeks of instructional time in the
student's academic year; or]{.underline}

[(ii) The date, as determined by the school, that the student has
successfully completed the academic coursework in the student's academic
year.]{.underline}

[(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---]{.underline}

[(i) The student's completion of the weeks of instructional time in the
student's academic year; or]{.underline}

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

[(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.]{.underline}

[Current (c) and (d) become (d) and (e).]{.underline}

\* \* \* \* \*

**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.]{.underline}

\* \* \* \* \*

~~(d) *Number of payment periods.* Notwithstanding paragraphs (b) and
(c) of this section, an institution may choose to have more than two
payment periods. If an institution so chooses, the regulations in
paragraphs (b) and (c) of this section are modified to reflect the
increased number of payment periods. For example, if an institution
chooses to have three payment periods in an academic year in a program
that measures progress in credit hours but does not have academic terms,
each payment period must correspond to one-third of the academic year
measured in both credit hours and weeks of instruction.~~

\* \* \* \* \*

**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]{.underline}.

\* \* \* \* \*

\(b\) *Federal interest in title IV, HEA program funds.*
[(1)]{.underline} ~~Except for funds received by an institution for
administrative expenses and for funds used for the Job Location and
Development Program under the FWS Programs, f~~[F]{.underline}unds
received by an institution under the title IV, HEA programs are held in
trust for the intended student beneficiary[,]{.underline} ~~and~~ the
Secretary[, or lender or a guaranty agency under the FFEL
programs.]{.underline}~~. FFEL program funds are also held in trust for
lenders and guaranty agencies, in addition to the student beneficiaries
and the Secretary, under 34 CFR 682.207.~~ 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]{.underline}.

[(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\--]{.underline}

\(i\) 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]{.underline}**.**

\* \* \* \* \*

\(c\) *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).]{.underline} An institution pays a
student or parent directly by---

~~(1) Releasing to the student or parent a check provided by a lender to
the institution under an FFEL Program;~~

(~~2~~[1]{.underline}) 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;]{.underline} ---

~~(i) Releasing or mailing the check to the student or parent; or~~

~~(ii) Notifying the student or parent that the check is available for
immediate pickup.~~

(~~3~~[2]{.underline}) Initiating an ~~electronic funds transfer
(~~EFT~~)~~ to[---]{.underline}

~~a bank account designated by~~ the student['s]{.underline} or
parent['s bank account]{.underline}. [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\--]{.underline}~~;~~

[(i) Ensure that the bank account is FDIC insured;]{.underline}

[(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;]{.underline}

[(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;]{.underline}

[(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 devise
that is used to access electronically the funds in that
account;]{.underline}

[(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;]{.underline}

[(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;]{.underline}

[(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]{.underline}

[(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]{.underline}

(~~4~~[3]{.underline}) 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)(i):

\(b\) *Student or parent authorizations*. (1) If an institution obtains
written authorization from a student or parent, as applicable, the
institution may---

~~(i) Disburse title IV, HEA program funds to a bank account designed by
the student or parent;~~

(i~~i~~) Renumber the rest of the section.

**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.]{.underline}

\* \* \* \* \*

\(g\) *Late disbursements*.

\* \* \*

\(4\) *Limitations*. (i) ~~Generally, a~~[A]{.underline}n 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. ~~On an exception basis,
and with the approval of the Secretary, an institution may make a late
disbursement after the 120-day period, if the reason the late
disbursement was not made within the 120-day period was not the fault of
the student~~.

\(ii\) ...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) ~~Before an institution disburses title IV, HEA
program funds f~~[For any award year, an]{.underline} 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]{.underline}

[(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.]{.underline}

**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.]{.underline}

\(a\) *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[\--]{.underline}

[(i)]{.underline} ~~r~~[R]{.underline}eceived those funds from the
Secretary~~.~~[; or]{.underline}

[(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.]{.underline}

[(2)]{.underline} ~~Except as provided in paragraph (b) of this section,
a~~[A]{.underline}n institution must return promptly to the Secretary
any amount of excess cash in its account or accounts.

(~~2~~[3]{.underline}) The provisions in this section do not apply to
the title IV, HEA program funds that an institution receives from the
Secretary under the just-in-time payment method.

~~(b) *Excess cash tolerances*. If an institution draws down title IV,
HEA program funds in excess of its immediate cash needs, the institution
may maintain the excess cash balance in the account the institution
established under §668.164 only if---~~

~~(i) In the award year preceding that drawdown, the amount of that
excess cash balance is less than\--~~

~~(A) For a period of peak enrollment at the institution during which
that drawdown occurs, three percent of its prior-year drawdowns; or~~

~~(B) For any other period, one percent of its total prior-year
drawdowns; and~~

~~(ii) Within the next seven days, the institution eliminates its excess
cash balance by disbursing title IV, HEA program funds to students or
parents for at least the amount of that balance.~~

~~(2) For the purposes of this section, a period of peak enrollment at
an institution occurs when at least 25 percent of the institution's
students start classes during a given 30-day period. For any award year,
an institution calculates the percentage of students who strted classes
during a given 30-day period by---~~

~~(i) For the prior award year in which the 30-day period began,
determining the number of students who started classes during that
period;~~

~~(ii) Determining the total number of students who started classes
during the entire award year used in paragraph (b)(2)(i) of this
section;~~

~~(iii) Dividing the number of students in paragraph (b)(2)(i) of this
section by the number of students in paragraph (b)(2)(ii) of this
section; and~~

~~(iv) Multiplying the result obtained in paragraph (b)(2)(iii) of this
section by 100.~~

~~(3) For the purpose of determining the total amount of title IV, HEA
program funds under paragraph (b)(1)(i) of this section, an institution
that participates in the Direct Loan Program may include, for the latest
year for which the Secretary has complete data, the total amount of
loans guaranteed under the FFEL Program for students attending the
institution during that year.~~

**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 Federal Perkins Loan, FSEOG, Federal Pell Grant, ACG, and National SMART Grant program funds if the recipient withdraws, drops out, or is expelled before his or her first day of class~~Treatment of title IV grant and loan funds if the recipient does not begin attendance.]{.underline}

(a)(1) If a student ~~officially withdraws, drops out, or is expelled
before his or her first day of class of a payment period,~~[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]{.underline} [student]{.underline}~~paid to the student
for that payment period for institutional or noninstitutional costs
under the Federal Pell Grant, ACG, National SMART Grant, FSEOG, and
Federal Perkins Loan programs~~.

\(2\) The institution shall return ~~that overpayment~~[those
funds]{.underline} to the respective title IV, HEA programs ~~in the
amount that the student received from each program~~[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.]{.underline}

\(b\) For purposes of this section, the Secretary considers that a
student ~~drops out before his or her first day of class of a payment
period~~[has not begun attendance in a payment period or period of
enrollment]{.underline} if the institution is unable to document the
student\'s attendance at any class during the payment period [or period
of enrollment.]{.underline}

\(c\) 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;]{.underline}

[(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;]{.underline}

[(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]{.underline}

[(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---]{.underline}

[(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]{.underline}

[(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.]{.underline}

[(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---]{.underline}

[(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]{.underline}

\(2\) 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.]{.underline}

(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.]{.underline} ~~register for the period of
enrollment for which the loan was made, or a registered student
withdraws or is expelled prior to the first day of classes of the period
of enrollment for which the loan is made, the school shall return the
proceeds to the lender no later than the period specified in §668.167.~~

~~(4) If the school is unable for any other reason to document that a
registered student attended school during the period of enrollment for
which the loan is made, the school must determine the student\'s
withdrawal date as required under §682.605, and by the deadline
described in §682.607(c), shall notify the lender of the student\'s
withdrawal, expulsion, or failure to attend school, if applicable, and
return to the lender---~~

~~(i) Any loan proceeds credited directly by the school to the
student\'s account; and~~

~~(ii) The amount of payments made directly by the student to the
school, to the extent that they do not exceed the amount of any loan
proceeds delivered by the school to the student.~~

\* \* \* \* \*

####### [§ 682.607   Payment of a]{.underline} ~~refund or a~~[return of title IV, HEA program funds to a lender]{.underline} ~~upon a student\'s withdrawal~~[for a student who does not begin attendance or withdraws.]{.underline}

~~(a)~~ *General.* By applying for a FFEL loan, a borrower authorizes
the school to pay directly to the lender that portion of a ~~refund or~~
return of title IV, HEA program funds from the school [required under
§668.21 or §668.22, as applicable,]{.underline} that is allocable to the
loan [if the borrower does not begin attendance or
withdraws]{.underline}~~upon the borrower\'s withdrawal~~. A school---

(a~~1~~) Must pay that portion of the student\'s ~~refund or~~ return of
title IV, HEA program funds that is allocable to a FFEL loan to---

(1~~i~~) The original lender; or

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

(b~~2~~) Must provide simultaneous written notice to the borrower if the
school makes a payment of ~~a refund or~~ a return of ~~title IV,
HEA~~[FFEL]{.underline} program funds to a lender on behalf of that
student.

~~(b) *Allocation of a refund or returned title IV, HEA program funds.*
In determining the portion of a refund or the return of title IV, HEA
program funds upon a student\'s withdrawal for an academic period that
is allocable to a FFEL loan received by the borrower for that academic
period, the school must follow the procedures established in part 668
for allocating a refund or return of title IV, HEA program funds.~~

~~(c) *Timely payment.* A school must pay a refund or a return of title
IV, HEA program funds that is due in accordance with the timeframe in
§668.22(j).~~

[§685.303 Processing loan proceeds.]{.underline}

\* \* \* \* \*

\(b\) \* \* \*

\* \* \* \* \*

\(3\) [If a student does not begin attendance in the period of
enrollment, disbursed loan proceeds must be handled in accordance with
§668.21.]{.underline} ~~If a registered student withdraws or is expelled
prior to the first day of classes of the period of enrollment for which
the loan is made, or fails to attend school during that period, or if
the school is unable for any other reason to document that the student
attended school during that period, the school shall notify the
Secretary, within 30 days of the date described in §685.305(a), of the
student\'s withdrawal, expulsion, or failure to attend school, as
applicable, and return to the Secretary---~~

~~(i) Any loan proceeds credited by the school to the student\'s
account; and~~

~~(ii) The amount of payments made by the student to the school, to the
extent that they do not exceed the amount of any loan proceeds disbursed
by the school to the student.~~

**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.

**Change:**

[§674.16 Making and disbursing loans.]{.underline}

\* \* \* \* \*

~~(g) Only one advance is necessary if the total amount the institution
awards a student for an academic year under the Federal Perkins Loan
program is less than \$501.~~

[§676.16 Payment of an FSEOG.]{.underline}

\* \* \* \* \*

~~(e) Only one payment is necessary if the total amount the institution
awards a student for an academic year under the FSEOG program is less
than \$501.~~

**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.]{.underline}

\* \* \* \* \*

\(5\) (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]{.underline} ~~make a direct~~
[disburse]{.underline}~~ment of any grant funds that make up the
post-withdrawal disbursement~~ [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]{.underline}**.**

~~(*1*[)]{.underline}~~[(*2*)]{.underline} 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]{.underline} 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.

~~(*2*)~~[(*3*)]{.underline} The institution must make a direct
disbursement of any ~~grant or~~ 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
~~grant or~~ 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]{.underline} 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]{.underline} 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]{.underline}, 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]{.underline} 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]{.underline},
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.]{.underline}

\* \* \* \* \*

(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

~~(D) Is not offered with overlapping terms; and~~

\(ii\) The ~~institution offering the~~ program [uses an academic
calendar that provides at least 30 weeks of instructional time in
---]{.underline}

\(A\) ~~Provides the program using an academic calendar that includes
two~~ [Two]{.underline} 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]{.underline}; ~~and~~ [or]{.underline}

\(B\) ~~Provides at least 30 weeks of instructional time in the terms
specified in paragraph (a)(1)(ii)(A) of this section.~~ [Any two
semesters or trimesters, or any three quarters where --]{.underline}

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

[(*2*) The program is offered exclusively in semesters, trimesters, or
quarters, and]{.underline}

[(*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. ~~,~~]{.underline} ~~and the program is offered
exclusively in semesters, trimesters, or quarters**. **~~

\* \* \* \* \*

**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.]{.underline}

\* \* \* \* \*

\(e\) *Programs using [credit hours without terms or]{.underline} clock
hours ~~or credit hours without terms~~.* [(1)]{.underline} 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---

(~~1~~[i]{.underline}) Determining the student\'s Scheduled Federal Pell
Grant using the Payment Schedule; [and]{.underline}

(~~2~~[ii]{.underline}) Multiplying the amount determined under
paragraph (e)(1)[(i)]{.underline} of this section by the lesser of---

[(~~i~~A)]{.underline}

> ~~(The number of weeks of instructional time required for a full-time
> student to complete the lesser of the clock or credit hours in the
> programs or the academic year) / (The number of weeks of instructional
> time in the program's academic year)~~

+-----------------------------------------------------------------------+
| > [The number of credit or clock hours in a payment                   |
| > period]{.underline}                                                 |
+-----------------------------------------------------------------------+
| > [The number of credit or clock hours in the program's academic      |
| > year]{.underline}                                                   |
+-----------------------------------------------------------------------+

; or

~~(ii[B]{.underline})~~ One; and

  -----------------------------------------------------------------------
  [The number of weeks of instructional time required for a full-time
  student to complete the credit or clock hours in the payment
  period]{.underline}

  [The number of weeks of instructional time in the academic
  year]{.underline}
  -----------------------------------------------------------------------

~~(3) Multiplying the amount determined under paragraph (e)(2) of this
section by---~~

> ~~(The number of credit or clock hours in a payment period) / (The
> number of credit hours in the program's 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.]{.underline}

**[(Perhaps the following only goes in the preamble)]{.underline}**

**[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)]{.underline}**

[(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.]{.underline}

**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.]{.underline}

\* \* \* \* \*

(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]{.underline}**,** a single term (e.g., a semester or quarter), or

\(ii\) [Except as provided in paragraph (f)(1)(ii)(C),]{.underline}
~~At~~ [at]{.underline} 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]{.underline}, 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)]{.underline} at the school; [or]{.underline} ~~or~~

\(B\) The academic year as defined by the school in accordance with 34
CFR 668.3[.]{.underline}~~; [or ]{.underline}~~

\(C\) 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]{.underline}

\* \* \* \* \*

(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]{.underline}**,** a single academic term (e.g., a semester or
quarter); or

\(B\) [Except as provided in paragraph (a)(9)(i)(C),
at]{.underline}~~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]{.underline}, 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)]{.underline} at the school; [or]{.underline}~~or~~

(*2*) The academic year as defined by the school in accordance with 34
CFR 668.3[.]{.underline}~~**;** [or]{.underline}~~

[(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.]{.underline}

**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.]{.underline}

\* \* \* \* \*

\(d\) *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 ~~current charges for~~---

\(i\) [Current year charges for]{.underline} ~~T~~[t]{.underline}uition
and fees;

\(ii\) [Current year]{.underline} ~~B~~[b]{.underline}oard
[charges]{.underline} , if the student contracts with the institution
for board; ~~and~~

\(iii\) [Current year]{.underline} ~~R~~[r]{.underline}oom
[charges]{.underline}, if the student contracts with the institution for
room~~.~~[; and]{.underline}

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

\(2\) 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.