**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 for 3-14 to 3-16 meeting:** 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:** No

**Update since 3-14 to 3-16 meeting:** Full-time clock hour definition
has reverted to 24 clock hours per week.

**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,]{.underline} ~~[the]{.mark}~~
[[24]{.mark}]{.underline} clock hours per week[.]{.mark} ~~[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.]{.mark}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]{.underline} [~~15~~
[12]{.underline}]{.mark} [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 for 3-14 to 3-16 meeting:** 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:** Yes.

**Update since 3-14 to 3-16 meeting:** Language that references
post-baccalaureate teacher certification programs as covered by
§690.6(c)(5) was added to the definition for undergraduate student.

**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.),]{.underline}
~~[and]{.mark}~~ [Veterinary Medicine (D.V.M.), Chiropractic (D.C. or
D.C.M.), Law (L.L.B., [or]{.mark} 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., [or]{.mark} M.H.L.).]{.underline}

\* \* \* \* \*

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

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

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

[[(3)]{.underline}~~i~~]{.mark}~~s enrolled in a program leading to a
first professional degree;~~

[~~(2)~~]{.mark} [Has completed the equivalent of at least three
[academic]{.mark} 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.]{.underline}[~~;. and~~]{.mark}

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

\* \* \* \* \*

*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.
[For purposes of §690.6 (c)(5) students who have completed a
baccalaureate program of study and who are subsequently completing a
state-required teacher certification program are treated as
undergraduates.]{.mark}]{.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. [However, for purposes of
§690.6 (c)(5) students who have completed a baccalaureate program of
study and who are subsequently completing a state-required teacher
certification program are treated as
undergraduates.]{.mark}]{.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 for 3-14 to 3-16 meeting:** A definition of
independent study will be added to §668.2(b).

**Update since 3-14 to 3-16 meeting:** Narrowed the definition of
independent study and added it to §668.10(a)(3)(iii).

**Tentative Agreement:** No

**Change:**

[§ 668.]{.underline}[~~2(b)~~[10(a)(3)(iii)]{.underline} ~~General
Definitions~~ [Direct Assessment Programs.]{.underline}]{.mark}

\* \* \* \* \*

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

[~~(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~~]{.mark}

~~([2]{.mark})~~ [[A week of instructional time in a direct assessment
program is any seven-day period in which at least one day of educational
activity occurs. Educational activity in a direct assessment program
includes regularly scheduled learning sessions, faculty-guided
independent study, consultations with a faculty mentor, development of
an academic action plan addressed to competencies identified by the
institution, or, in combination with any of the foregoing, assessments.
It does not include credit for "life experience."]{.mark} For purposes
of direct assessment programs, [independent study occurs when]{.mark} 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[. 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
]{.mark}]{.underline}[assure [progress within the course or
program.]{.underline}~~; and~~]{.mark}

[~~(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.~~]{.mark}

\* \* \* \* \*

**Issue #4 & Issue #6:** Nonterm credit hour programs\--Use of
completion of half the weeks of instructional time for timing of loan
disbursements, and require institutions to use consistent disbursement
periods for Title IV programs, where allowed under the law.

**Regulatory Cite:** §668.4, §668.22(e)(5), §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 for 3-14 to 3-16 meeting:** 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.

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.

**Updated information since 3-14 to 3-16 meeting:** (1) Changed the
payment period definition for a remainder of a program less than half an
academic year in length to be the remainder of the program, instead of
dividing that period in two (for clock hour programs, nonterm credit
hour programs and, for FFEL and Direct Loans, nonstandard term credit
hour programs with terms that are not substantially equal in length).
Noted in §668.164 by cross-reference that, in accordance with statute,
the regulations will require two disbursements of FFEL and Direct Loan
funds for this single payment period. (2) Added clock hours to the
provision in new §668.4(c)(3) addressing situations where an institution
is unable to determine when a student has successfully completed half
the hours. (3) Added language to new §668.4(d) to address the cohort
default rate exemption for disbursing FFEL and Direct Loan funds for
nonstandard term, nonterm, and clock hour programs. (4) Moved from
§668.164 to new §668.4(e) language that delineates when an institution
may count excused absences as completed clock hours. (5) Added at new
§668.4(g)(3) current FSA Handbook guidance regarding the definition of a
payment period for a student who transfers into another program at the
same school where the coursework is substantially similar to permit the
school to consider the student to remain in the same payment period. (6)
Defined "successfully complete" in new §668.4(h). (7) In §668.164(b),
specified that an institution must disburse funds once each payment
period, noted exceptions to this. (8) For consistency and to make clear
the changed treatment of less-than-full-time students, changed the
definition of "period of enrollment" to be measured in weeks of
instructional time. (9) Revised the Return of Title IV funds language to
require an institution to always use the payment period that ends later,
rather than requiring 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.

**Tentative Agreement:** No.

####### **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~~]{.mark}---]{.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,~~]{.mark} and half the
number of weeks of instructional time in the program [~~or remainder of
the program, as applicable~~]{.mark}; 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~~]{.mark}.]{.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) 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---]{.underline}]{.mark}

[[(*1*) The first payment period is the period of time in which the
student successfully completes half the number of credit hours in the
remaining portion of the program and half the number of weeks of
instructional time remaining in the program; and]{.underline}]{.mark}

[[(*2*) The second payment period is the period of time in which the
student successfully completes the remainder of the
program.]{.underline}]{.mark}

[[(C) 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.]{.mark}]{.underline}

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

\(i\) 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]{.mark}~~ and half the number of weeks [of
instructional time]{.underline} in the program [~~or remainder of the
program~~]{.mark}; 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---]{.mark}

[(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 remaining portion of the
program and half the number of weeks [of instructional time]{.underline}
remaining in the program; and]{.mark}

[(B) The second payment period is the period of time in which the
student [successfully]{.underline} completes the remainder of the
program.]{.mark}

[(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.]{.mark}

\(3\) 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 [[or clock hours]{.mark}]{.underline} 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) *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.~~

[[(d) *Application of the cohort default rate exemption.*
Notwithstanding paragraphs (a), (b), and (c) of this section, if
§682.604(b)(10) or §685.301 (b)(8) applies to an eligible program that
measures progress in credit hours and uses nonstandard terms, an
eligible program that measures progress in credit hours and does not
have academic terms, or an eligible program that measures progress in
clock hours, the payment period for purposes of FFEL and Direct Loan
funds is the loan period for those portions of the program to which
§682.604(b)(10) or §685.301 (b)(8) applies.]{.underline}]{.mark}

[[(e) *Excused absences.* (1) For purposes of this section, in
determining whether a student successfully completes the clock hours in
a payment period, an institution may include clock hours for which the
student has an excused absence (i.e., an absence that a student does not
have to make up) if---]{.underline}]{.mark}

[[(1) The institution has a written policy that permits excused
absences; and]{.underline}]{.mark}

[[(2) The number of excused absences under the written policy for
purposes of this paragraph does not exceed the lesser
of---]{.underline}]{.mark}

[[(i) The policy on excused absences of the institution\'s accrediting
agency or, if the institution has more than one accrediting agency, the
agency designated under 34 CFR part 600.11(b);]{.underline}]{.mark}

[[(ii) The policy on excused absences of any State agency that licenses
the institution or otherwise legally authorizes the institution to
operate in the State; or]{.underline}]{.mark}

[[(iii) Ten percent of the clock hours in the payment
period.]{.underline}]{.mark}

(~~e~~[f]{.underline}) *Re-entry within 180 days.* If a student
withdraws from a program described in paragraph (~~b~~[c]{.underline})
[~~or (c[d]{.underline})~~]{.mark} 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~~g) *Re-entry after 180 days or transfer.* (1) [[Except as provided
in paragraph (g)(3) of this section, and]{.underline}
~~S~~[s]{.underline}]{.mark}ubject to the conditions of paragraph
([g]{.underline})(2) of this section, an institution calculates new
payment periods for the remainder of a student\'s program based on
paragraph[~~s~~]{.mark} [~~(b) through (d)~~[(c)]{.underline}]{.mark} of
this section, for a student who withdraws from a program described in
paragraph ([~~b~~c]{.mark}) ~~[or (c)]{.mark}~~ of this section, and---

\(i\) Reenters that program after 180 days,

\(ii\) Transfers into another program at the same institution within any
time period, or

\(iii\) Transfers into a program at another institution within any time
period.

\(2\) For a student described in paragraph (~~f~~[g]{.underline})(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[.]{.mark}

[[(3) Notwithstanding the provisions of paragraph (g)(1) of this
section, an institution may consider a student who transfers into
another program at the same institution to remain in the same payment
period if---]{.underline}]{.mark}

[]{.mark}

[[(i) The student is continuously enrolled at the
institution;]{.underline}]{.mark}

[]{.mark}

[[(ii) The coursework in the payment period the student is transferring
out of is substantially similar to the coursework the student will be
taking when he or she first transfers into the new
program;]{.underline}]{.mark}

[]{.mark}

[[(iii) The payment periods are substantially equal in length;
and]{.underline}]{.mark}

[]{.mark}

[[(iv) There are little or no changes in the charges to the
student.]{.mark}]{.underline}

####### [(h) *[Definitions.]{.mark} [~~Terms substantially equal in length.~~]{.mark}* []{.mark}For purposes of this section~~,~~[\--]{.mark}]{.underline}

####### [[(1)]{.mark} Terms are ["]{.mark}substantially equal in length["]{.mark} if no term in the program is more than two weeks of instructional time longer than any other term in that program.]{.underline}

[[(2) A student "successfully completes" credit hours or clock hours if
the institution considers the student to have passed the coursework
associated with those hours.]{.mark}]{.underline}

####### [§668.10   Direct assessment programs.]{.underline}

(a)\* \* \*

(3)\* \* \*

\(ii\) A payment period in a direct assessment program for which
equivalence in credit hours has been established must be determined
under the requirements in §668.4(a)[[,]{.underline} ~~or~~]{.mark} (b),
[[or (c),]{.underline}]{.mark} as applicable, using the academic year
determined in accordance with paragraph (a)(3)(i) of this section (or
the portion of that academic year comprising or remaining in the
program). A payment period in a direct assessment program for which
equivalence in clock hours has been established must be determined under
the requirements in §668.4(c), using the academic year determined in
accordance with paragraph (a)(3)(i) of this section (or the portion of
that academic year comprising or remaining in the program).

\* \* \* \* \*

####### [§ 668.164 Disbursing funds.]{.underline}

\* \* \* \* \*

\(b\) *Disbursements by payment period.* (1) Except as provided in
paragraph (b)(2) of this section, an institution must disburse title IV,
HEA program funds on a payment period basis. [~~Except as provided in
paragraph (g) of this section, an institution may disburse title IV, HEA
program funds to a student or parent for a payment period only if the
student is enrolled for classes for that payment period and is eligible
to receive those funds.~~ [An institution must disburse title IV, HEA
program funds once each payment period unless---]{.underline}]{.mark}

[[(i) For FFEL and Direct Loan funds, §682.604(c)(6)(ii), or
§685.301(b)(3) applies; or]{.underline}]{.mark}

[[(ii) For FSEOG, Federal Pell Grant, ACG and National SMART Grant
funds, an institution chooses to make more than one disbursement in each
payment period in accordance with §676.16(a)(3), §690.76, or §691.76, as
applicable.]{.underline}]{.mark}

\(2\) The provisions of paragraph (b)(1) of this section do not apply to
the disbursement of FWS Program funds. []{.mark}

[[(3) Except as provided in paragraph (g) of this section, an
institution may disburse title IV, HEA program funds to a student or
parent for a payment period only if the student is enrolled for classes
for that payment period and is eligible to receive those
funds.]{.underline}]{.mark}

[~~(3) For a student enrolled in an eligible program at an institution
that measures academic progress in clock hours, in determining whether
the student completes the clock hours in a payment period, an
institution may include clock hours for which the student has an excused
absence if---~~]{.mark}

[~~(i) The institution has a written policy that permits excused
absences; and~~]{.mark}

[~~(ii) The number of excused absences under the written policy for
purposes of this paragraph does not exceed the lesser of---~~]{.mark}

[~~(A) The policy on excused absences of the institution\'s accrediting
agency or, if the institution has more than one accrediting agency, the
agency designated under 34 CFR part 600.11(b);~~]{.mark}

[~~(B) The policy on excused absences of any State agency that licenses
the institution or otherwise legally authorizes the institution to
operate in the State; or~~]{.mark}

[~~(C) Ten percent of the clock hours in the payment period.~~]{.mark}

[~~(4) For purposes of paragraph (b)(3) of this section, an "excused
absence" is an absence that a student does not have to make
up.~~]{.mark}

\* \* \* \* \*

####### [§ 682.200   Definitions.]{.underline}

\* \* \* \* \*

\(b\) The following definitions also apply to this part:

\* \* \* \* \*

*Period of enrollment.* The period for which a Stafford, SLS, or PLUS
loan is intended. The period of enrollment must coincide with a *bona
fide* academic term established by the school for which institutional
charges are generally assessed (e.g. semester, trimester,
[[or]{.mark}]{.underline} quarter [[in weeks of instructional
time]{.underline}]{.mark}, length of the student\'s program [[in weeks
of instructional time]{.mark}]{.underline} or academic year [[in weeks
of instructional time]{.underline}]{.mark}). The period of enrollment is
also referred to as the loan period.

\* \* \* \* \*

####### [§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]{.underline}~~[[applies---]{.mark}~~y~~]{.underline}~~---~~

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

[(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 [student completes
half the number of credit hours or clock hours and half the number of
weeks of instructional time in the payment period]{.underline}
~~calendar midpoint between the first and last scheduled days of class
of the loan period~~.]{.mark}

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

[(ii) If a loan period is one payment period, the school must make at
least two [payments]{.underline}~~disbursements~~ during that payment
period. The school may not make the second
[payment~~di~~]{.underline}~~sbursement~~ until the [student completes
half the number of credit hours or clock hours and half the number of
weeks of instructional time in the payment period]{.underline}
~~calendar midpoint between the first and last scheduled days of class
of the loan period~~.]{.mark}

(4)(i) If one or more payment periods have elapsed before a school makes
a disbursement, the school may include in the disbursement loan proceeds
for completed payment periods; or

\(ii\) If the loan period is equal to one payment period and more than
one-half of it has elapsed, the school may include in the disbursement
loan proceeds for the entire payment 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 and change cross-references 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, [the institution
must---]{.mark}]{.underline}[~~consistently use the same payment
period~~]{.mark}

[[(A)(*1*) F]{.mark}or students [in the category]{.mark} 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), [use the payment period during which the student withdrew
that ends later; and ]{.mark}]{.underline}~~[,]{.mark} [the institution
must---]{.mark}~~

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

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

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

[[(*2*)]{.mark} Attribute [to the payment period that ends later]{.mark}
the [amount of]{.mark} title IV, HEA program assistance that [~~is~~ was
disbursed or that could have been]{.mark} disbursed [~~by~~ from]{.mark}
the payment period[s]{.mark} that]{.underline} [~~is~~
[are]{.underline}]{.mark} [not used for the calculation [that overlap
the payment period that ends later]{.mark}.]{.underline}

[[(B) For students in the category who are disbursed or could have been
disbursed aid using only the payment period definition in §668.4(b)(1)
or the payment period definition in §668.4(b)(2), use the payment period
definition for which title IV, HEA program funds were disbursed for a
student's calculation under this section.]{.underline}]{.mark}

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

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

**Summary of Change for 3-14 to 3-16 meeting:** 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.

**Updated information since 3-14 to 3-16 meeting:** Made technical
changes to clarify treatment for nonstandard term programs with terms
that are not substantially equal in length and/or each term is not at
least 9 weeks of instructional time in length.

**Tentative Agreement:** Yes.

**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 [and/or
each term is not at least 9 weeks of instructional time in
length]{.mark}, 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 [and/or
each term is not at least 9 weeks of instructional time in
length]{.mark}, 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 #7:** Recovery of funds not claimed by student or parent.

**Regulatory cite:** §668.161(b)

**Summary of Change for 3-14 to 3-16 meeting:** Establishes a timeframe
for returning unclaimed funds to the Department or FFEL lender.

**Updated information since 3-14 to 3-16 meeting:** Provides an
institution with 30 days to return funds if a check or EFT is returned
undeliverable. Changed to allow, but not require, an institution to make
a subsequent disbursement attempt for funds returned from a failed EFT
or returned check. Any second attempt to disburse the funds must be made
within the 30-day period. Changed the timeframe for returning funds from
uncashed checks that are not returned from 180 days to 240 days from the
date the first attempt is made to pay the funds to the student either by
check or by EFT. If the institution made the initial attempt to disburse
the funds by EFT and subsequently attempted to issue the funds by check,
the 240-day period begins when the initial EFT attempt was made.
 Institutions will be expected to take the 240-day time period from the
initial attempt to pay the student into consideration when deciding
whether to attempt a second payment to a student by check or EFT.

**Tentative Agreement:** No.

**Change:**

[§668.161 Scope and purpose]{.underline}.

\* \* \* \* \*

\(b\) *Federal interest in title IV, HEA program funds.* (1) 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.~~

[(2) Notwithstanding any State law, an institution must
return]{.underline} [~~immediately~~]{.mark} [to the Secretary, lender,
or guaranty agency, as applicable, any title IV, HEA program funds that
it [attempts to disburse directly to a beneficiary but the beneficiary
does not receive or negotiate those funds. The institution must return
those funds no later than the earlier of---
]{.mark}]{.underline}[~~disbursed by issuing a check or initiating an
electronic funds transfer (EFT) if~~---]{.mark}

[[(i) 240 days after the date it makes an initial attempt to disburse
the funds by check or Electronic Fund Transfer (EFT), if payment was
made by check and the check was neither returned nor cashed;
or]{.underline}]{.mark}

[(ii) 30 days after a check or attempted EFT is returned undeliverable.
 The institution may make a second attempt to disburse undelivered funds
during the 30-day period.]{.mark}

[~~(i) No later than 180 days after the date the check was issued, the
check is not negotiated by the beneficiary; or~~]{.mark}

[~~(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.~~]{.mark}

**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 for 3-14 to 3-16 meeting:** 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.

**Updated information since 3-14 to 3-16 meeting:** Removes the proposed
provision that a check is issued on the date the institutions hands it
over to the student, in favor of the current provision that the check is
issued on the date the institution notifies a student it is available
for immediate pick up. However, if the student doe not pick up the check
within 21 days, the institution must mail the check or return the funds.
Modifies the provisions an institution must satisfy when it is actively
involved in assisting or opening bank accounts on behalf of students by
(1) replacing the State Law and Esign references with a requirement that
the institution obtain written affirmative consent from the student or
parent, and (2) providing that the institution may request, but not
require, a student to open a bank account. Defines "bank account" as
that term is used in this section. Addresses the situation where a
school issues a stored-value card (or smartcard) that a student uses to
access funds the institution holds for the student.

**Tentative Agreement:** No

**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).~~ [(1)]{.underline} An institution pays
a student or parent directly by---

(~~1~~[i)]{.underline} Releasing to the student or parent a check
provided by a lender to the institution under an FFEL Program;

(~~2[1]{.underline}~~[ii]{.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
~~by\--, 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; on~~ the date that it-

[(]{.underline}~~i~~[A) Mails the check to the student or parent;
or]{.underline}

[(~~ii~~B) Notifies the student that the check is available for
immediate pickup at a specified location at the institution. The
institution may hold the check for up to 21 days after the date it
notifies the student. If the student does not pick up the check within
this 21-day period, the institution must immediately mail the check to
the student or parent, initiate an EFT to the student's or parent's bank
account, or return the funds to the appropriate title IV, HEA
program]{.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.~~

(~~32~~[iii]{.underline}) Initiating an ~~electronic funds transfer
(~~EFT~~)~~ to a bank account designated by the student~~'s~~ or parent;
or

[(iv) Dispensing cash for which the institution obtains a signed receipt
from the student or parent.]{.underline}

[(2) For purposes of this section, the term "bank account" means an FDIC
insured account such as a checking or savings account, or a similar
account that underlies a stored-value card or other transaction
device.]{.underline}~~bank account~~

[(3)]{.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,~~ [An institution may request, but not require or
rely on, the student or parent to open a bank account. If the
institution opens a bank account on behalf of a student or parent,
establishes a process the student or parent follows to open a bank
account, or otherwise assists the student or parent in opening a bank
account,]{.underline} the institution must\--~~;~~

[(i) ~~Ensure that the bank account is FDIC insured~~ Obtain in writing
affirmative consent from the student or parent to open that
account;]{.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)~~]{.underline} ~~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
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, particularlty with the consent and consumer protection
provisions contained in those laws.~~

[(~~iv~~iii) 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]{.underline} ~~electronically~~ [the funds in
that account;]{.underline}

[(iv) 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 (or ATMs of an affiliated bank),]{.underline} ~~and~~
[so that the student does not incur any cost in making cash withdraws
from that office or ATMs;]{.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;

[(vi)]{.underline} ~~May n~~[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~~;~~.]{.underline} ~~or~~

~~(43) 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.~~ Use the student's or
parent's title IV, HEA program funds to pay for charges described in
§668.164(d)(2) that are included in that authorization; and

(ii~~i~~) Except if prohibited by the Secretary under the reimbursement
[or cash monitoring payment]{.underline} method, hold on behalf of the
student or parent any title IV, HEA program funds that would otherwise
be paid directly to the student or parent under §668.164(e). [Under this
provision, the institution may issue a stored-value card or other
similar device that allows the student or parent to access those funds
at his or her discretion to pay for educationally related
expenses.]{.underline}

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

**Regulatory cite:** §668.164(g)(4)

**Summary of Change for 3-14 to 3-16 meeting:** Removes the late, late
disbursement provisions.

**Updated information since 3-14 to 3-16 meeting:** Changed the deadline
for making late, late disbursements from 120 days to 180 days.

**Tentative Agreement:** No

**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~~[180]{.underline}]{.mark} 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~~[180]{.underline}]{.mark} 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 3-14 to 3-16 meeting:** For each award year,
requires an institution to obtain written confirmation from a student
that she wants the loans included in her aid package.

**Updated information since 3-14 to 3-16 meeting:** No longer requires
an institution to receive confirmation from a student each year before
disbursing loan funds. Instead, modifies the existing requirement that
an institution notify a student (or parent) whenever it credits the
student's account with loan funds. Under this proposal, an institution
must notify the student (or parent) no earlier than 30 days before it
credits the account, but no later than the date it credits the account.
In addition, a student (or parent) would have 30 days to respond to the
request, rather than the existing 14 days.

**Tentative Agreement:** No

**Change:**

§668.165 Notices and authorizations

\(a\) *Notices.* (1) [Before an institution disburses title IV, HEA
program funds]{.underline} ~~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~~

~~(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.~~

\(2\) If an institution credits a student's account at the institution
with Direct Loan, FFEL, or Federal Perkins Loan Program funds, the
institution must notify the student, or parent of---

\(i\) The date and amount of the disbursement;

\(ii\) The student's right, or parent's right to cancel all or a portion
of that loan or loan disbursement and have the loan proceeds returned to
the holder of that loan. However, the institution does not have to
provide this information with regard to FFEL Program funds unless the
institution received the loan funds from a lender through an EFT payment
or master check; and

\(iii\) The procedures and the time by which the student or parent must
notify the institution that he or she wishes to cancel the loan or loan
disbursement.

\(3\) The institution must send the notice described in paragraph (a)(2)
of this section in writing no earlier than 30 days before, ~~and~~
[but]{.underline} no later than ~~30 days after,~~ [the date it
credits]{.underline} ~~crediting~~ the student's account at the
institution.

\(4\) [If the institution receives a request from a student or parent to
cancel all or a portion of a loan or loan disbursement within 30 days
after the date the institution sends the notice described in paragraph
(a)(2) of this section, the institution must return the loan proceeds,
cancel the loan, or do both, in accordance with applicable program
regulations.]{.underline}

~~(i) A student or parent must inform the institution if he or she
wishes to cancel all or a portion of a loan or loan disbursement.~~

~~(ii) The institution must return the loan proceeds, cancel the loan,
or do both, in accordance with applicable program regulations if the
institution receives a loan cancellation either\--~~

~~(A) Within 14 days after the date the institution sends the notice
described in paragraph (a)(2) of this section; or~~

~~(B) If the institution sends the notice the notice described in
paragraph (a)(2) of this section more than 14 days prior to the first
day of a payment period, by the first day of the payment period.~~

\* \* \*

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

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

**Summary of Change for 3-14 to 3-16 meeting:** 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.

**Updated information since 3-14 to 3-16 meeting:** Instead of
eliminating the excess cash tolerances, keeps the current provision that
allows an institution to maintain excess cash for up to seven days for
an amount that does not exceed one percent of the total amount of funds
drawn down in the prior award year. Simplifies the current language in
paragraph (c) regarding the consequences for maintaining excess cash.

**Tentative Agreement:** No

**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) 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.~~]{.mark}

([[2]{.underline}~~3~~]{.mark}) 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*. An institution may maintain for up to
seven days an amount of excess cash that does not exceed one percent of
the total amount of funds the institution drew down in the prior award
year. The institution must return immediately to the Secretary any
amount of excess cash over the one-percent tolerance and any amount
remaining in its account after the seven-day tolerance
period.]{.underline}]{.mark}

~~(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 started 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.~~

\(c\) *Consequences for maintaining excess cash [~~balances~~]{.mark}.*

Upon a finding that an institution maintains excess cash for any amount
or timeframe over that allowed in the tolerance provisions in paragraph
(b) of this section, the actions the Secretary may take include, but are
not limited to\--

[(~~1) ~~]{.mark}~~If the Secretary finds that [an]{.mark} institution
maintains [in its account excess cash balances greater than those
allowed under]{.mark} paragraph (b) of this section[, the
Secretary]{.mark}---~~

([~~i~~[1]{.underline}]{.mark}) [~~As provided in paragraph (c)(2) of
this section, requires~~ Requiring]{.mark} the institution [to]{.mark}
reimburse the Secretary for the costs the Secretary ~~[deems to
have]{.mark}~~ incurred in [~~making those excess funds available~~
[providing that excess cash]{.underline}]{.mark} to the institution; and

[[(2) Providing funds to the institution under the reimbursement payment
method or the cash monitoring payment method described in §668.163(d)
and (e), respectively.]{.underline}]{.mark}

[~~(ii) May initiate a proceeding to fine, limit, suspend, or terminate
the institution\'s participation in one or more title IV, HEA programs
under subpart G of this part.~~]{.mark}

[~~(2) For the purposes of this section, upon a finding that an
institution has maintained excess cash, the Secretary---~~]{.mark}

[~~(i) Considers the institution to have issued a check on the date that
the check cleared the institution\'s bank account, unless the
institution demonstrates to the satisfaction of the Secretary that it
issued the check shortly after the institution wrote the check;
and~~]{.mark}

[~~(ii) Calculates, or requires the institution to calculate, a
liability for maintaining excess cash balances in accordance with
procedures established by the Secretary. Under those procedures, the
Secretary assesses a liability that is equal to the difference between
the earnings that the excess cash balances would have yielded if
invested under the applicable current value of funds rate and the actual
interest earned on those balances. The current value of funds rate is an
annual percentage rate, published in a Treasury Financial Manual (TFM)
bulletin, that reflects the current value of funds to the Department of
Treasury based on certain investment rates. The current value of funds
rate is computed each year by averaging investment rates for the
12-month period ending every September. The TFM bulletin is published
annually by the Department of Treasury. Each annual bulletin identifies
the current value of funds rate and the effective date of that
rate.~~]{.mark}

**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 for 3-14 to 3-16 meeting**: 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.

**Updated information since 3-14 to 3-16 meeting:** Changed §668.21 to
(1) reflect current FFEL and Direct Loan requirements whereby an
institution is not responsible for returning any FFEL and Direct Loan
funds that are disbursed directly to a student before the student begins
attendance, unless the institution knew that the student would not begin
attendance prior to disbursing the funds directly to the student; (2)
Also in accordance with current requirements, in addition to the amount
of FFEL and Direct Loan funds credited to the student's account, an
institution must return the amount paid to the institution by or on
behalf of the student, not to exceed the total amount of loan funds
disbursed; and (3) An institution must notify the lender or Secretary,
as appropriate, of amounts disbursed directly to the student that are
outstanding, so that the lender or Secretary can issue a 30-day demand
to the student. Changed §682.604 to clarify how to handle disbursed
funds vs. undelivered funds. Determined that no changes to §682.607 are
necessary.

**Tentative Agreement:** No.

**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}

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

[(1) 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, [for Federal Perkins Loan, FSEOG, Federal
Pell Grant, Academic Competitiveness Grant, and National SMART Grant
program funds]{.mark}]{.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~~[[; and]{.underline}]{.mark}

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

[[(i)(A) Return all FFEL and Direct Loan funds that were credited to the
student's account at the institution; and]{.underline}]{.mark}

[[(B) Return the amount of payments made directly by or on behalf of the
student to the institution, up to the total amount of the loan funds
disbursed; and]{.underline}]{.mark}

[[(ii) For remaining amounts of FFEL or Direct Loan funds disbursed
directly to the student, the institution is not responsible for
returning the funds, but must immediately notify the lender or the
Secretary, as appropriate, when it becomes aware that the student will
not or has not begun attendance so that the lender or Secretary will
issue a final demand letter to the borrower in accordance with §682.412
or §685.211, as appropriate.]{.underline}]{.mark}

[[(C) Notwithstanding paragraph (a)(1)(ii)(B) of this section, if an
institution knew that a student would not begin attendance prior to
disbursing FFEL or Direct Loan funds directly to the student (e.g., the
student notified the institution that he or she would not attend, or the
institution expelled the student), the institution must return those
funds.]{.underline}]{.mark}

([b]{.underline}) The institution shall return ~~that
overpayment~~[those funds [for which it is responsible under paragraph
(a) of this section]{.mark}]{.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. []{.mark}]{.underline}

([c]{.underline}) 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}

\(d\) 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---~~]{.mark}

[~~(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~~]{.mark}

~~[(2) The lender must issue a final demand letter to the borrower in
accordance with §682.412.]{.mark}~~

\* \* \* \* \*

####### [§ 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[---]{.mark}]{.underline}

[[(i)]{.underline} ~~d~~D]{.mark}isbursed [loan proceeds must be handled
in accordance with §668.21]{.underline}[~~and §682.607~~]{.mark}.

[[(ii) Undelivered loan funds held by the school must be handled in
accordance with §668.167.]{.underline}]{.mark}~~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.~~

\* \* \* \* \*

####### [[\[No change to § 682.607 necessary.\]]{.mark}  ]{.underline}

####### [§ 682.607   Payment of a ~~refund or a~~return of title IV, HEA program funds to a lender ~~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 for 3-14 to 3-16 meeting:** Eliminates the provision
in both programs.

**Updated information since 3-14 to 3-16 meeting:** None.

**Tentative Agreement:** Yes.

**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 for 3-14 to 3-16 meeting:** 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.

**Updated information since 3-14 to 3-16 meeting:** Changed to make
clear that an institution must perform actions [as soon as
possible]{.underline}, but no later than the deadline. Technical changes
made to eliminate unnecessary words.

**Tentative Agreement:** Yes.

**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 [as soon as
possible]{.mark} 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,~~]{.mark} 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]{.mark}~~ 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*)~~]{.mark} 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~~[as
soon as possible, but no later than]{.underline}]{.mark} 120 days
[~~of~~ [after]{.underline} t]{.mark}he 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 for 3-14 to 3-16 meeting:** 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.

**Updated information since 3-14 to 3-16 meeting:** None.

**Tentative Agreement:** Yes

**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 for 3-14 to 3-16 meeting:** The change in §690.63
(e) will revise the calculation of Pell Grant payments for programs
using clock hours or credit hours without terms.

**Updated information since 3-14 to 3-16 meeting:** As discussed at the
last meeting, we have changed the second fraction in §690.63 (e). And,
we have deleted (as they are now unnecessary) proposed changes
addressing programs without full-time students and self-paced programs.
Further, we have made a change in §690.66 to have the calculation for
correspondence study (without terms) track (where appropriate) the
calculation for programs using clock hours or credit hours without
terms.

**Tentative Agreement:** Yes

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

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

[(]{.underline}[~~iA~~[i]{.underline}]{.mark}[)]{.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             |
+-----------------------------------------------------------------------+
| > The number of credit or clock hours in the program's academic year  |
+-----------------------------------------------------------------------+

; or

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

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

  The number of weeks of instructional time in the program's academic
  year
  -----------------------------------------------------------------------

~~(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.~~]{.mark}

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

**[~~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)~~]{.mark}**

[~~(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.~~]{.mark}

##### [[§ 690.66   Correspondence study.]{.underline}]{.mark}

[]{.mark}

[(a) An institution calculates the Federal Pell Grant for a payment
period for a student in a program of study offered by correspondence
courses without terms, but not including any residential component
by---]{.mark}

[(1) Determining the student\'s annual award using the half-time
Disbursement Schedule; [and]{.underline}]{.mark}

[~~(2) Determining the length of the correspondence program in weeks of
instructional time by---~~]{.mark}

[~~(i) Preparing a written schedule for submission of lessons that
reflect a workload of at least 12 hours of preparation per week;
and~~]{.mark}

[~~(ii) Determining the number of weeks of instructional time in the
program of study using the written schedule for submission of
lessons;~~]{.mark}

[(~~3~~[2]{.underline}) Multiplying the annual award determined from the
Disbursement Schedule for a half-time student by the lesser
of---]{.mark}

> [~~The number of weeks of instructional time as determined under
> paragraph (a)(2)(ii) of this section for a student to complete the
> lesser of the credit [hours in the program or academic
> year]{.underline}~~]{.mark}
>
> [~~[The number of weeks of instructional time in the program's
> academic year definition]{.underline}~~]{.mark}

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

[; or]{.mark}

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

[]{.mark}

+-----------------------------------------------------------------------+
| [The number of weeks of instructional time in the payment             |
| period]{.mark}                                                        |
+-----------------------------------------------------------------------+
| [The number of weeks of instructional time in the program's academic  |
| year]{.mark}                                                          |
|                                                                       |
| []{.mark}                                                             |
+-----------------------------------------------------------------------+

[]{.mark}

[~~(4) Multiplying the amount determined under (a)(3) of this section
by---~~]{.mark}

> [~~[The number of credit hours in the payment period]{.underline} The
> number of credit hours in the program's academic year~~]{.mark}

**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 for 3-14 to 3-16 meeting:** 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.

**Updated information since 3-14 to 3-16 meeting:** In a similar
fashion, we are proposing changes that would allow a school, after it
had certified or originated a loan for the balance of a degree program
that a student was completing, 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 starts another degree program at the school, and then allow the
school to certify or originate a full loan for the next full academic
year.

**Tentative Agreement:** No

**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) [or
(D)]{.mark},]{.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~~ [- and]{.underline}]{.mark} [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~~ [prior school certified
or originated a loan for a period of enrollment that overlaps the period
of enrollment at the new school,]{.underline} ~~would be certifying a
loan for a period of enrollment that overlaps the period for which the
prior school certified or originated a loan~~,]{.mark} the
[[new]{.mark}]{.underline} school may certify a loan for the remaining
portion of the [~~student's~~]{.mark} program or academic
year[.]{.underline} [~~, whichever is less.~~]{.mark} In this case the
school may certify a loan for [[an amount that does not
exceed]{.mark}]{.underline} the remaining balance of the student's
annual loan limit.

[(D) For a student who completes a degree program at a school, where the
student's last loan to complete that program had been for less than an
academic year, and the student then begins a new degree program at the
same school, the school may certify a loan for the remainder of the
academic year. In this case the school may certify a loan for an amount
that does not exceed the remaining balance of the student's annual loan
limit at the loan level associated with the new program.]{.mark}

\* \* \* \* \*

[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) [or (D)]{.mark},
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~~ [and]{.underline}]{.mark}
[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 [prior school originated or certified
a loan for a period of enrollment that overlaps the period of enrollment
at the new school, ]{.mark}]{.underline}~~[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,]{.mark}~~ [the [new]{.mark}
school may originate a loan for the remaining portion of
the]{.underline} [~~student's~~]{.mark} [program or academic
year.]{.underline} [~~, whichever is less~~[.]{.underline}]{.mark} [In
this case the school may originate a loan for [an amount that does not
exceed]{.mark} the remaining balance of the student's annual loan
limit.]{.underline}

[(D) For a student who completes a degree program at a school, where the
student's last loan to complete that program had been for less than an
academic year, and the student then begins a new degree program at the
same school, the school may originate a loan for the remainder of the
academic year. In this case the school may originate a loan for an
amount that does not exceed the remaining balance of the student's
annual loan limit at the loan level associated with the new
program.]{.mark}

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

**Regulatory cite:** §668.164(d)(1)

**Summary of Change for 3-14 to 3-16 meeting:** 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:** No

**Update since 3-14 to 3-16 meeting:**

**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,
a~~[A]{.underline}]{.mark}n institution may use title IV, HEA program
funds to credit a student's account at the institution to satisfy
~~current charges for~~---

([~~i~~[1]{.underline}]{.mark}) [Current year charges
for[---]{.mark}]{.underline}

[[(i) Ttuition]{.underline}]{.mark} and fees;

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

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

[[(iv) If the institution obtains the student's or parent's
authorization under §668.165(b), other educationally-related charges
incurred by the student at the institution.]{.underline}]{.mark}

[(~~iv~~2) Prior award year charges for]{.underline} [~~tuition and
fees, or room or board that are less~~ [a total of not
more]{.underline}]{.mark} [than
\$]{.underline}[~~1~~[2]{.underline}]{.mark}[00
[for---]{.mark}]{.underline}[~~.~~]{.mark}

[[(i) Tuition and fees, room or board; and]{.underline}]{.mark}

([~~2~~[ii]{.underline}]{.mark}) [~~After~~ [If the
institution]{.underline}]{.mark} obtain[[s]{.underline}~~ing~~]{.mark}
the ~~[appropriate authorization from a]{.mark}~~
student[['s]{.underline}]{.mark} or parent[['s]{.mark}
[authorization]{.mark}]{.underline} under
§668.165[[(b)]{.underline}]{.mark}, [[other educationally-related
charges incurred by the student at the institution.]{.mark}]{.underline}
[~~the institution may use title IV, HEA program funds to credit a
student's account at the institution to satisfy---~~]{.mark}

[~~(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~~]{.mark}

[~~(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.~~]{.mark}