UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF SPECIAL EDUCATION AND

REHABILITATIVE SERVICES

REHABILITATION SERVICES ADMINISTRATION

WASHINGTON, D.C. 20202

[POLICY DIRECTIVE]{.underline}

RSA-PD-92-02

RSM-2015 & 2515 [1]{.underline}/

DATE: November 21, 1991

TO: STATE VOCATIONAL REHABILITATION AGENCIES (GENERAL)

STATE VOCATIONAL REHABILITATION AGENCIES (BLIND)

CLIENT ASSISTANCE PROGRAMS

RSA SENIOR MANAGEMENT TEAM

SUBJECT: Provision of Financial Assistance for Post-Secondary Education
By State Vocational Rehabilitation Agencies

BACKGROUND: This directive to the State Vocational Rehabilitation (VR)
agencies addresses the provision of financial assistance for
post-secondary education by VR agencies to clients who have been refused
Pell Grants because these individuals defaulted on student loans. It
also clarifies that a VR client cannot be required to take a student
loan as a condition for receiving VR services.

Section 103(a)(3) of the Rehabilitation Act of 1973, as amended,
authorizes the use of VR funds to pay for \"vocational and other
training services \... [Provided]{.underline}, that no training services
in institutions of higher education shall be paid for with funds under
this title unless maximum efforts have been made to secure grant
assistance, in whole or in part, from other sources to pay for such
training.\"

In addition, Section 101(a)(8) provides that each State plan shall:
\"provide, at a minimum, for the provision of the vocational
rehabilitation services specified in clauses (1) through (3) and clause
(12) of section 103(a), and for the provision of such other services as
are specified under such section after a determination that comparable
services and benefits are not available under any other program, except
that such determinations shall not be required where it would delay the
provision of such services to any individual at an extreme medical
risk.\"

[1]{.underline}/ Under Development

This language, contained in the Rehabilitation Act Amendments of 1986
(Public Law 99-506), amends the \"similar benefits\" provision formerly
contained in Section 101(a)(8) of the Act.

POLICY

STATEMENT: It is clear from these provisions that Congress intended that
VR clients avail themselves of the numerous grant programs which are
available to pay for higher education before VR program funds are used
to pay these costs. Although the term \"maximum efforts\" is not defined
in the Act, 34 CFR 361.42(a)(4) further clarifies the responsibility for
assuring that maximum effort is made to secure assistance for
post-secondary education through the statement that \"maximum efforts
have been made by the [State unit]{.underline} to secure grant
assistance in whole or in part from other sources.\" Since the State
unit is not eligible to apply for grant assistance, the responsibility
assigned under 34 CFR 361.42(a)(4) can best be carried out by such
actions as providing information about grants to the client, providing
information about eligibility requirements, assisting the client, as
necessary, in completing an application for student financial
assistance, and by assuming mutual responsibility in working with the
Financial Aid Officer and the client in resolving any problems that may
arise.

This does not mean that a VR client can be required to take a student
loan as a condition for receiving VR services. Any form of student
financial assistance that contains a pay-back requirement would not be
considered either grant assistance within the meaning of Section
103(a)(3) of the Rehabilitation Act of 1973, as amended, or a comparable
benefit or service within the meaning of Section 101(a)(8).

The process to coordinate student financial aid with VR assistance was
never intended to force a client into accepting a loan as part of the
aid package; neither was it intended to force a client to undertake a
campus work study arrangement if the serious nature of the client\'s
disability makes work study an unreasonable option. This does not mean,
however, that a client should be discouraged from exercising either or
both of these options. The VR counselor may, if State agency policy
permits, substitute VR assistance

for the loan component of the aid package. In those instances where
neither grant assistance nor VR agency assistance is available, the
client may have no other choice but to accept the self-help package
offered if higher education is to be attained.

Under Title IV of the Higher Education Act, in order to receive a grant,
loan, or work assistance, a student must not owe a refund on grants
previously received or be in default on any student loan (20 U.S.C.
Section 1091(a)(3)).

Therefore, a client who owes a refund on a Title IV grant should make
repayment arrangements with the post-secondary institution that made the
grant and a client who has defaulted on a student loan should proceed to
clear his default status.

For purposes of determining eligibility for a Pell Grant, a client who
has previously defaulted on a Title IV loan is considered to no longer
be in default status if:

\(1\) the holder of the loan certifies for the purpose of reinstating
Title IV eligibility that the borrower has made satisfactory
arrangements to repay the defaulted loan, or

\(2\) the loan is discharged in bankruptcy.

(34 CFR 668.7)

In view of the flexibility in loan repayments, the fact that these VR
clients have remained in default status may indicate that they have not
attempted to make arrangements to repay their student loans, that would
make them eligible for additional student financial aid under Title IV
of the Higher Education Act. Consequently, it would appear that these
individuals may not have made the maximum efforts required by Section
103(a)(3) of the Act to secure grant assistance from non-VR sources to
pay for their training. It may also indicate that the State unit may
have been remiss in carrying out the responsibility assigned to it under
34 CFR 361.42(a)(4) to assure that maximum efforts are made to secure
grant assistance from other sources and to have fully advised the client
of the responsibilities that are an inherent part of accepting the
assistance. In this connection because of its earlier involvement in
helping the client secure student financial assistance, the State unit
must counsel with the client and assist in whatever ways it can to help
work out some

satisfactory means of clearing up the client\'s default.

Under Section 101(a)(8), the determination of the availability of
comparable services and benefits may take into consideration whether
such financial assistance was \"unavailable\" due to actions within the
individual\'s control. For example, if an individual simply decided not
to repay the loan although financially able to do so, it would be
appropriate within the purpose of Section 101(a)(8), to treat the grant
assistance for which the individual is now ineligible as \"available\"
within the meaning of that section due to the earlier choice made by the
individual. Thus, it could be concluded that the individual has failed
to carry out his/her part of the mutual responsibility to make maximum
efforts to secure grant assistance, and the VR program would be
prohibited from paying the individual\'s college costs under Section
103(a)(3).

We recognize that true hardship cases may arise where an individual has
limited or no financial resources available and cannot work out a
satisfactory repayment agreement with the lender. Under such
circumstances, where a responsible repayment effort has been made, it
can be concluded that maximum efforts have been made to secure grant
assistance and that comparable benefits and services are not available.
In such an instance, VR assistance may be appropriate. However, such a
determination could only be made by a VR counselor on an individual
basis, after carefully examining all of the circumstances involving an
individual\'s default status and financial situation, and must be
consistent with the intent that VR resources be used as a last resort to
pay for training in institutions of higher education.

CITATIONS

IN LAW: (1) Section 101(a)(8) under Title I of the Rehabilitation Act or
1973, as amended.

\(2\) Section 103(a)(3) under Title I of the Rehabilitation Act of 1973,
as amended.

\(3\) 20 U.S.C. Section 1091(a)(3), Title IV of the Higher Education
Act, as amended.

CITATIONS IN

REGULATIONS: (1) 34 CFR 668.7 of the Student Assistance General
Provisions

\(2\) 34 CFR 361.47(b)

\(3\) 34 CFR 361.42(a)(4)

EFFECTIVE

DATE: Upon Issuance

ISSUANCES

DELETED: RSA-PAC-88-05 and RSA-PAC-88-01

EXPIRATION

DATE: NONE

INQUIRIES: RSA Regional Commissioners

Commissioner

Rehabilitation Services Administration