49798 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

1U.S. Att’y Gen. Memorandum on Federal Law 

Protections for Religious Liberty (Oct. 6, 2017) 

(hereinafter ‘‘Mem.’’), https://www.justice.gov/opa/ 

press-release/file/1001891/download. 

DEPARTMENT OF EDUCATION 

34 CFR Parts 600, 674, 675, 676, 682, 

685, 686, 690, 692, and 694 

[Docket ID ED–2019–OPE–0081] 

RIN 1840–AD40, 1840–AD44 

Federal Perkins Loan Program, Federal 

Work-Study Programs, Federal 

Supplemental Educational Opportunity 

Grant Program, Federal Family 

Education Loan Program, William D. 

Ford Federal Direct Loan Program, 

National Direct Student Loan Program, 

Teacher Education Assistance for 

College and Higher Education Grant 

Program, Federal Pell Grant Program, 

Leveraging Educational Assistance 

Partnership Program, and Gaining 

Early Awareness and Readiness for 

Undergraduate Programs 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Final regulations. 

SUMMARY: In response to the United 

States Supreme Court decision in 

Trinity Lutheran Church of Columbia, 

Inc. v. Comer (Trinity Lutheran), and 

the United States Attorney General’s 

October 7, 2017 Memorandum on 

Federal Law Protections for Religious 

Liberty pursuant to Executive Order No. 

13798 (Attorney General’s 

memorandum), the Department of 

Education (Department or we) amends 

the current regulations regarding the 

eligibility of faith-based entities to 

participate in the Federal Student Aid 

programs authorized under title IV of 

the Higher Education Act of 1965, as 

amended (HEA), and the eligibility of 

students to obtain certain benefits under 

those programs. The Department also 

amends the Teacher Education 

Assistance for College and Higher 

Education (TEACH) Grant Program 

regulations to minimize the number of 

TEACH Grants that are converted to 

Federal Direct Unsubsidized Loans, and 

to update, strengthen, and clarify other 

areas of the TEACH Grant Program 

regulations. 

DATES:

Effective date: These regulations are 

effective July 1, 2021. 

Implementation date: For the 

implementation dates of the included 

regulatory provisions, see the 

Implementation Date of These 

Regulations section of this document. 

FOR FURTHER INFORMATION CONTACT: For 

information about the provisions of this 

regulation, contact Sophia McArdle at 

(202) 453–6318 or by email at 

Sophia.McArdle@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD) or a text 

telephone (TTY), call the Federal Relay 

Service (FRS), toll free, at 1–800–877– 

8339. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

Purpose of This Regulatory Action: 

Through this regulatory action, the 

Department responds to the United 

States Supreme Court decision in 

Trinity Lutheran Church of Columbia, 

Inc. v. Comer (Trinity Lutheran), 137 S. 

Ct. 2012 (2017), and the United States 

Attorney General’s October 7, 2017 

Memorandum on Federal Law 

Protections for Religious Liberty 

pursuant to Executive Order No. 13798 

(Attorney General’s memorandum) 1 in 

order to ensure that members of 

religious orders are not denied access to 

title IV funding or benefits under the 

title IV programs. The Department also 

amends the Teacher Education 

Assistance for College and Higher 

Education (TEACH) Grant Program 

regulations to minimize the number of 

TEACH Grants that are converted to 

Federal Direct Unsubsidized Loans, and 

to update, strengthen, and clarify other 

areas of the TEACH Grant Program 

regulations. A more detailed summary 

can be found in the Summary of the 

Major Provisions of This Regulatory 

Action section. 

Summary of the Major Provisions of 

This Regulatory Action: 

To restore religious liberty to faithbased institutions and religious 

students, these regulations— 

• Restore the ability of members of 

religious orders, who also are pursuing 

courses of study at institutions of higher 

education, to participate in the title IV 

programs by eliminating regulatory 

provisions that treat members of 

religious orders as having no financial 

need in certain circumstances. 

• Allow certain borrowers, who serve 

as full-time volunteers in tax-exempt 

organizations and give religious 

instruction, conduct worship service, 

proselytize, or fundraise to support 

religious activities as part of their 

official duties, to defer repayment of 

Federal Perkins Loans, National Direct 

Student Loans (NDSLs), and Federal 

Family Education Loan Program (FFEL) 

loans. 

• Provide an interpretation of the 

PSLF regulations that permits borrowers 

who work for employers that engage in 

religious instruction, worship services, 

or proselytizing to qualify for PSLF. 

• Clarify requirements for private 

secondary and postsecondary faithbased institutions’ participation in the 

GEAR UP program. 

• Conform language in the Leveraging 

Educational Assistance Partnership 

Program (LEAP) and Federal WorkStudy Programs (FWSP) regulations 

regarding allowable program activities 

to statutory language. 

For the TEACH Grant Program, the 

regulations— 

• Clarify that grant recipients may 

satisfy the TEACH Grant service 

obligation by teaching for an 

educational service agency that serves 

low-income students. 

• Clarify the beginning date of the 

eight-year period for completing the 

TEACH Grant service obligation. 

• Revise the definition of ‘‘highly 

qualified.’’ 

• Update and expand the conditions 

under which a TEACH Grant recipient 

may satisfy the TEACH Grant service 

obligation by teaching in a high-need 

field listed in the Department’s annual 

Teacher Shortage Area Nationwide 

Listing (Nationwide List) at https://

tsa.ed.gov. 

• Clarify the service obligation 

requirements for TEACH Grant 

recipients who withdraw from the 

institution where they received a 

TEACH Grant before completing the 

program for which they received the 

grant, then later re-enroll in the same 

program or in a different TEACH Grant 

eligible program at the same academic 

level. 

• Provide that a TEACH Grant 

recipient may request reversal of a 

voluntary grant-to-loan conversion so 

that the recipient can complete the 

service obligation, as long as the service 

obligation is completed within eight 

years from when the grant recipient 

ceased enrollment at the institution 

where the recipient received the grant 

or, in the case of a student who received 

a TEACH Grant at one institution and 

subsequently transferred to another 

institution and enrolled in another 

TEACH Grant-eligible program, within 

eight years of ceasing enrollment at the 

other institution, excluding periods of 

suspension, which the recipient could 

apply for retroactively. 

• Expand the information that is 

provided to TEACH Grant recipients 

during initial, subsequent, and exit 

counseling, and add a new conversion 

counseling requirement for grant 

recipients whose TEACH Grants are 

converted to Direct Unsubsidized Loans. 

• Provide counseling requirements 

for TEACH Grant recipients who receive 


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Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 49799 

reversals of voluntary grant-to-loan 

conversions. 

• Add new conditions under which a 

TEACH Grant recipient may receive a 

temporary suspension of the eight-year 

period for completing the service 

obligation and for grant recipients 

whose grants were converted to loans in 

error and who need additional time to 

complete the teaching service obligation 

once the error is corrected. 

• Remove the current regulatory 

requirement for TEACH Grant recipients 

to certify, within 120 days of completing 

the program for which they received 

TEACH Grants, that they have begun 

qualifying teaching service, or that they 

have not yet begun teaching, but they 

intend to satisfy the service obligation. 

• Simplify the regulations specifying 

the conditions under which TEACH 

Grants are converted to Direct 

Unsubsidized Loans so that for all grant 

recipients, loan conversion will occur 

only if the recipient asks the Secretary 

to convert his or her TEACH Grants to 

loans, or if the recipient fails to begin or 

maintain qualifying teaching service 

within a timeframe that would allow the 

recipient to satisfy the service obligation 

within the eight-year service obligation 

period. 

• Specify that the Secretary will send 

grant recipients, at least annually, a 

notice containing detailed information 

about the TEACH Grant service 

obligation requirements, a summary of 

the grant recipient’s progress toward 

satisfying the service obligation, and an 

explanation of the process by which a 

grant recipient whose TEACH Grants are 

converted to Direct Unsubsidized Loans 

may request reconsideration of the 

conversion if he or she believes that the 

grants were converted in error. 

• Provide that grant recipients will be 

automatically provided with a 

‘‘statement of error’’ when a grant that 

was incorrectly converted to a loan is 

later reconverted to a TEACH Grant. 

• Describe the actions that the 

Secretary will take if a grant recipient’s 

request for reconsideration of the 

conversion of the grant to a loan is 

approved or denied. 

• Specify that the Secretary will 

notify a grant recipient in advance of the 

date by which he or she will be subject 

to loan conversion for failure to begin or 

maintain qualifying teaching service 

within a timeframe that would allow the 

recipient to complete the service 

obligation within the eight-year service 

obligation period, and inform the 

recipient of the final date by which he 

or she must provide documentation of 

teaching service to avoid having his or 

her grants converted to loans. 

• Incorporate statutory changes and 

update, simplify, and clarify various 

areas of the TEACH Grant Program 

regulations. 

Costs and Benefits 

As discussed in the Regulatory Impact 

Analysis section of this notice, the 

Department estimates that these final 

regulations would not result in 

significant costs. Changes regarding 

faith-based institutions and religious 

students have minimal impacts on 

financial aid costs to the Federal 

government because these provisions 

affect relatively few students and 

borrowers. Changes regarding the PSLF 

program to comply with the Religious 

Freedom Restoration Act (RFRA) carry 

potential costs related to a relatively 

small increase in the population of 

eligible recipients. Changes regarding 

the GEAR UP program have no 

estimated costs as participation in the 

Department’s competitive grant 

programs is voluntary, and the program 

currently serves a small number of 

religiously affiliated schools. While 

changes to the TEACH Grant Program 

improve the reporting and 

documentation process for recipients 

and increase the number of teaching 

positions in which TEACH Grant 

recipients could satisfy their service 

obligations, we do not believe that the 

changes would result in a significant 

increase in the number of grant 

recipients. 

Implementation Date of These 

Regulations: Section 482(c) of the HEA 

requires that we publish regulations 

affecting programs under title IV of the 

HEA in final form by November 1, prior 

to the start of the award year (July 1) to 

which they apply. However, that section 

also permits the Secretary to designate 

any regulation as one that an entity 

subject to the regulations may choose to 

implement earlier and the conditions for 

early implementation. 

The Secretary is exercising her 

authority under section 482(c) of the 

HEA to designate the regulatory changes 

to regulations at title 34, parts 600, 674, 

675, 676, 682, 685, 686, 690, 692, and 

694, of the Code of Federal Regulations 

included in this document for early 

implementation beginning on August 

14, 2020, at the discretion of each 

institution, or each agency, as 

appropriate. The Department will 

implement the regulations as soon as 

possible after the implementation date 

and will publish a separate notice 

announcing the timing of the 

implementation. Otherwise, the final 

regulations included in this document 

are effective July 1, 2021. 

Public Comment: In response to our 

invitation in the notice of proposed 

rulemaking (NPRM) published in the 

Federal Register on December 11, 2019 

(84 FR 67778), we received 46 

comments on the proposed regulations. 

We do not discuss comments or 

recommendations that are beyond the 

scope of this regulatory action or that 

would require statutory change. 

Generally, we do not address technical 

or other minor changes. 

Analysis of Comments and Changes 

We developed these regulations 

through negotiated rulemaking. Section 

492 of the HEA requires that, before 

publishing any proposed regulations to 

implement programs under title IV of 

the HEA, the Secretary must obtain 

public involvement in the development 

of the proposed regulations. After 

obtaining advice and recommendations, 

the Secretary must conduct a negotiated 

rulemaking process to develop the 

proposed regulations. The negotiated 

rulemaking committee reached 

consensus on the proposed regulations 

that we published on December 11, 

2019 (84 FR 6778). The Secretary 

requested comments on the proposed 

regulations by January 10, 2020, and 46 

parties submitted comments. An 

analysis of the comments and of the 

changes in the regulations since 

publication of the NPRM follows. 

We group major issues according to 

subject, with appropriate sections of the 

regulations referenced in parentheses. 

We discuss other substantive issues 

under the sections of the regulations to 

which they pertain. Generally, we do 

not address minor, non-substantive 

changes, recommended changes that the 

law does not authorize the Secretary to 

make, or comments pertaining to 

operational processes. We also do not 

address comments pertaining to issues 

that were not within the scope of the 

NPRM. 

Faith-Based Entities 

General Comments 

Comments: Many commenters 

supported the proposed changes, 

because the proposed revisions better 

reflect the demands of the Free Exercise 

and Free Speech Clauses of the First 

Amendment to the United States 

Constitution and the current 

understanding of the Establishment 

Clause of the First Amendment. One 

commenter noted that even if Trinity 

Lutheran had not been decided and the 

Attorney General’s memorandum had 

not been issued, the Department’s 

proposed changes would be necessary to 

bring the Department’s regulations into 


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49800 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

2 454 U.S. 263 (1981)(holding unconstitutional a 

university’s exclusion of religious groups from the 

use of school facilities made available to other 

student groups and holding that such use would not 

have the ‘‘primary effect’’ of advancing religion in 

violation of the Establishment Clause). 

3 515 U.S. 819 (1995) (finding that, to abide by the 

Establishment Clause, it was not necessary for a 

university to deny eligibility to a student 

publication seeking to print religious viewpoints). 

4 474 U.S. 481 (1986) (holding that the 

Establishment Clause permitted a State to extend 

assistance to a blind person who chose to study at 

a religious college to become a pastor, missionary, 

or youth director). 

5These commenters cited Justice O’Connor’s 

concurrence, in which she disagreed with ‘‘the 

plurality’s conclusion that actual diversion of 

government aid to religious indoctrination is 

consistent with the Establishment Clause’’ and 

explained ‘‘that we have long been concerned that 

secular government aid not be diverted to the 

advancement of religion.’’ 530 U.S. 793, 840 (2000) 

(O’Connor, J., concurring in the judgment). 

6 540 U.S. 712, (2004) (finding that preventing the 

use of public funds for devotional theology 

instruction does not violate the Free Exercise 

Clause). 7 530 U.S. 793 at 808. 

compliance with four decades of 

Supreme Court jurisprudence, including 

Widmar v. Vincent,2 Rosenberger v. 

University of Virginia,3 and Witters v. 

Washington Department of Services for 

the Blind.4 In particular, the commenter 

noted that the Free Exercise Clause 

prohibits the government from imposing 

‘‘special disabilities’’ on individuals or 

institutions based on their religious 

views or status. The commenter also 

noted that RFRA prohibits the Federal 

government from substantially 

burdening a person’s religious exercise 

unless it can demonstrate a compelling 

interest unachievable by less restrictive 

means. Another commenter stated that 

the proposed regulations would provide 

relief to qualified student borrowers 

while maintaining critical safeguards to 

prevent Federal funds from being 

diverted to religious purposes. 

Discussion: We appreciate the 

commenters’ support. 

Changes: None. 

Comments: Some commenters 

supported the faith-based provisions of 

the proposed regulations and 

encouraged the Department to early 

implement the new provisions. 

Discussion: We agree that institutions 

should have the ability to early 

implement the faith-based provisions of 

the final regulations where possible, and 

that borrowers should similarly benefit 

from early implementation by the 

Department of regulatory changes that 

affect their ability to qualify for certain 

loan repayment benefits. Instructions 

regarding early implementation are 

discussed in the Implementation Date of 

These Regulations section of this 

preamble. 

Changes: The Department provides 

instructions regarding early 

implementation in the Implementation 

Date of These Regulations section of this 

preamble. 

Comments: Several commenters 

opposed the Department’s faith-based 

proposed regulations, arguing that the 

regulations misapply Supreme Court 

precedent. These commenters expressed 

concerns that the Department ignored 

relevant case law in the NPRM, 

including Mitchell v. Helms 5 and Locke 

v. Davey.6 Commenters also asserted 

that RFRA does not apply to the 

Department’s current regulations, since 

a borrower who desires to perform nonqualifying work should not receive 

public benefits. 

Commenters opined that the current 

regulations are sufficient to protect 

citizens’ religious freedoms, and that the 

proposed regulations regarding title IV 

programs would subsidize religious 

activities. These commenters expressed 

concern that the Department’s proposed 

regulations would favor religious 

institutions over their secular 

counterparts and would therefore 

violate the Establishment Clause. 

Commenters pointed to the facts in 

Locke v. Davey and argued that the State 

in that case refused to extend 

government funding to Davey, not 

because of his religious status, but 

because of how he proposed to use the 

funding—to study theology. These 

commenters argued that, because the 

grantees and recipients at issue in the 

Department’s regulations are religious, 

they will use grants or deferments in a 

manner similar to Davey and will 

therefore violate the Establishment 

Clause. One commenter also pointed out 

that the Establishment Clause still 

prohibits the government from awarding 

funds for a religious purpose or with an 

effect of advancing religion. 

Other commenters stated that Trinity 

Lutheran has no precedential value with 

respect to the Department’s regulations. 

They claimed that the Court in that 

decision limited its holding to 

discrimination based on religious 

identity only with respect to playground 

resurfacing. One commenter 

disapproved of the Department’s 

reliance on Trinity Lutheran to justify 

its changes but recognized that the 

Department’s changes would not require 

public funds to be used for religious 

purposes, and therefore expressed 

support for the changes. But that 

commenter stated that the Department 

did not need to cite Trinity Lutheran to 

support its final regulations. 

Discussion: The Department agrees 

with commenters that it must not 

violate the Establishment Clause’s 

prohibition on government 

advancement of religion. The 

Department agrees that Congress may 

bar the use of government funds for 

religious purposes consistent with the 

Supreme Court’s holding in Locke v. 

Davey if it wished to do so. We also 

agree that the Department may provide 

direct aid to religious institutions 

without having the effect of advancing 

religion as long as there is no 

governmental indoctrination, religion is 

not used to define recipients, and there 

is no excessive governmental 

entanglement with religion, consistent 

with Mitchell v. Helms.7

The Department does not agree, 

however, with those commenters who 

argued that the Establishment Clause 

requires the Department’s previous 

prohibitions in order to bar the use of 

government funds to advance religion or 

for religious purposes. Those 

commenters urged the Department to go 

beyond the requirements of the 

Establishment Clause. The Supreme 

Court has made it clear that a ‘‘policy 

preference’’ of ‘‘achieving greater 

separation of church and State than is 

already ensured under the 

Establishment Clause’’ is insufficient to 

justify excluding religious organizations 

from generally available benefits. Trinity 

Lutheran, 137 S. Ct. at 2024 (quoting 

Widmar v. Vincent, 454 U.S. 263, 276 

(1981)). Indeed, there is substantial 

Supreme Court precedent supporting 

the proposition that the government 

must not discriminate against 

individuals or entities on the basis of 

their religious identity. See, e.g., Trinity 

Lutheran, 137 S. Ct. at 2019; Church of 

the Lukumi Babalu Aye, Inc. v. Hialeah, 

508 U.S. 520, 533, 542 (1993); McDaniel 

v. Paty, 435 U.S. 618, 626 (1978) 

(plurality opinion); Everson v. Bd. of 

Educ. of Ewing, 330 U.S. 1, 16 (1947). 

Some commenters also stated the 

Department’s changes to eligibility 

requirements for certain aid would have 

the effect of advancing religion. The 

Department’s aid will not advance 

religion, nor do the Department’s 

changes require aid to be used for 

religious purposes. In the final 

regulations, the Department is 

correcting prior rules that disfavored 

faith-based institutions and students— 

not, as some commenters worried, to 

favor them over their secular 

counterparts. The changes affecting 

faith-based institutions and individuals 

in the final regulations fall into two 

broad categories: First, the eligibility of 

faith-based entities to participate in 

Federal Student Aid programs under 

title IV of the HEA; and second, the 


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8See Tilton v. Richardson, 403 U.S. 672, 683 

(1971), and Committee for Public Education & 

Religious Liberty v. Nyquist, 413 U.S. 756, 762 

(1973). 

eligibility of students to obtain benefits 

under those programs. Accordingly, the 

final rules permit members of a religious 

order to receive aid under title IV 

programs, including the Federal Pell 

Grant Program, the Federal Perkins Loan 

Program, the FWSP, the Federal 

Supplemental Educational Opportunity 

Grant Program (FSEOG) Program, the 

FFEL Program, and the Direct Loan 

Program. Also, the rules allow private 

secondary and postsecondary faithbased educational institutions to 

participate in GEAR UP. The final 

regulations set religious individuals and 

entities on equal footing with their 

secular counterparts by allowing such 

individuals and entities to qualify for 

the same aid already available to 

nonreligious individuals and entities. 

Therefore, such treatment is correcting 

an inequality, not creating one. 

Because of such inequality, the 

Department does not agree with the 

commenter who argued that RFRA is 

not implicated by the Department’s 

current rules excluding religious 

individuals and entities from the ability 

to participate in generally available 

benefit programs. Congress has tasked 

the Department with the duty to ensure 

that the Department’s actions, including 

its regulatory actions, do not 

substantially burden a person’s exercise 

of religion (absent a compelling 

government interest and a showing that 

the burden is the least restrictive means 

of furthering that interest). 42 U.S.C. 

2000bb, et seq. Because the current 

regulations discriminate against 

religious groups and deny individuals 

the ability to participate in important 

government programs on the basis of 

their religious status, the current 

regulations likely amount to a 

substantial burden on those entities’ 

exercise of religion. 

RFRA defines ‘‘religious exercise’’ as 

‘‘any exercise of religion, whether or not 

compelled by, or central to, a system of 

religious belief.’’ 42 U.S.C. 2000bb–2(4) 

(citing 42 U.S.C. 2000cc–5). The current 

rules impose a ‘‘penalty’’ on these 

individuals’ free exercise of religion, 

Trinity Lutheran, 137 S. Ct. at 2021— 

which they engage in by becoming 

members of religious orders, attending 

religious institutions, participating in or 

working at religious organizations, 

among other ways—by requiring them 

to ‘‘choose between their religious 

beliefs and receiving a government 

benefit.’’ Id. at 2023 (quoting Locke, 540 

U.S. at 720–21); see Sherbert v. Verner, 

374 U.S. 398, 404 (1963) (finding a 

substantial burden where it was 

‘‘apparent that appellant’s declared 

ineligibility for benefits derives solely 

from the practice of her religion,’’ 

forcing her ‘‘to choose between 

following the precepts of her religion 

and forfeiting benefits, on the one hand, 

and abandoning one of the precepts of 

her religion in order to accept work, on 

the other hand’’); see also 42 U.S.C. 

2000bb(b)(1) (‘‘The purposes of this 

chapter are—(1) to restore the 

compelling interest test as set forth in 

Sherbert v. Verner, 374 U.S. 398 (1963) 

and Wisconsin v. Yoder, 406 U.S. 205 

(1972) and to guarantee its application 

in all cases where free exercise of 

religion is substantially burdened 

. . .’’). 

And the Department’s status-based 

restrictions are neither necessary to 

further a compelling government 

interest, nor are they the least restrictive 

means of furthering any such interest. 

Therefore, RFRA would require the 

Department to alleviate the substantial 

burden imposed by its regulations. 

The Department also disagrees with 

one commenter’s suggestion that RFRA 

does not apply at all; the statute binds 

the ‘‘Government’’ which includes the 

Department in its regulating capacity, 42 

U.S.C. 2000bb–1(a), and further ‘‘applies 

to all Federal law, and the 

implementation of that law, whether 

statutory or otherwise, and whether 

adopted before or after November 16, 

1993.’’ 42 U.S.C. 2000bb–3(a). 

The Department disagrees with 

commenters who claimed that the 

Department’s current rules are 

sufficiently protective of religious 

freedom. The Supreme Court has 

upheld some religious-funding 

restrictions,8 but those decisions are in 

considerable tension with more recent 

Supreme Court cases that recognized 

that the First Amendment permits—and 

in some situations, requires—the 

government to provide religious 

organizations with access to government 

property under neutral and generally 

applicable rules. Additionally, the 

Supreme Court has repudiated the 

principle that the Establishment Clause 

bars government aid from flowing from 

religiously neutral government 

programs to religious institutions. See, 

e.g., Mitchell v. Helms, 530 U.S. at 835 

(plurality opinion) (overruling Wolman 

v. Walter, 433 U.S. 229 (1977) and Meek 

v. Pittenger, 421 U.S. 349 (1975)); id. at 

837 (O’Connor, J., concurring in the 

judgment) (same); Agostini v. Felton, 

521 U.S. 203, 235 (overruling Aguilar v. 

Felton, 473 U.S. 402 (1985) and School 

District of the City of Grand Rapids v. 

Ball, 473 U.S. 373 (1985)). 

The Supreme Court has made it clear 

that the government should be ‘‘neutral 

in its relations with groups of religious 

believers and non-believers; [the 

Establishment Clause] does not require 

the state to be their adversary.’’ Everson 

v. Board of Education, 330 U.S. 1, 18 

(1947). And a law that burdens religious 

practice that is not neutral and not 

generally applicable ‘‘must undergo the 

most rigorous of scrutiny’’ under the 

Free Exercise Clause. Church of the 

Lukumi Babalu Aye, Inc. v. City of 

Hialeah, 508 U.S. 520, 546 (1993). 

In Trinity Lutheran, the Court 

reiterated that this nondiscrimination 

principle of the Free Exercise Clause 

applies to government benefits and 

funding. The Court in that case rejected 

the State’s interest in ‘‘skating as far as 

possible from religious establishment 

concerns’’ as a basis for categorically 

excluding a religious organization from 

a generally available funding program. 

Trinity Lutheran, 137 S. Ct. at 2024. The 

Court applied ‘‘the most exacting 

scrutiny’’ to the government program, 

finding that it ‘‘expressly 

discriminate[d]’’ against an entity that 

would be otherwise eligible for the 

government grant but for that entity’s 

religious character. Id. 

That same basic defect is present in 

the Department’s current regulations: 

But for the entities’ and individuals’ 

religious character, they would have 

qualified for government aid under title 

IV. For example, under current 34 CFR 

674.9(c)(1), a student is prohibited from 

receiving a Federal Perkins Loan if that 

student was a ‘‘member of a religious 

order’’ that has as its primary objective 

‘‘the promotion of ideals and beliefs 

regarding a Supreme Being’’ and which 

required its members to forego monetary 

support and receive subsistence support 

from the order. Because the restriction 

only applies to individuals based on an 

individual’s members in a religious 

order, that restriction is based on the 

individual’s religious status. The 

Department believes that otherwiseeligible students and institutions should 

not be denied participation in title IV 

programs based solely on their religious 

identities and, furthermore, that the 

Free Exercise Clause prohibits such 

status-based religious discrimination. 

The Department considered 

commenters’ concerns that its changes 

amount to government subsidies for 

religious activities. These commenters 

included discussions of Locke v. Davey, 

which the Supreme Court distinguished 

in Trinity Lutheran as a case in which 

the recipient was denied a scholarship 

not because of who he was, but because 


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9See Authority of the Department of the Interior 

to Provide Historic Preservation Grants to Historic 

Religious Properties Such as the Old North Church, 

27 Op. O.L.C. 91, 114 (2003) (concluding that the 

Department of the Interior could provide historic 

preservation grants to renovate a still-active house 

of worship); Authority of FEMA to Provide Disaster 

Assistance to Seattle Hebrew Academy, 26 Op. 

O.L.C. 114, 129 (2002) (opining that FEMA could 

provide disaster relief funds for reconstruction after 

an earthquake to a Hebrew secondary school). 

of how he proposed to use the 

government funding—to prepare for 

ministry. See Trinity Lutheran, 137 S. 

Ct. at 2023. Under this analysis, the 

Court demonstrated that the 

constitutionality of an aid restriction 

depends on whether the restriction is 

predicated on the recipient’s religious 

status (which is presumptively 

unconstitutional), or whether it is based 

upon how the Federal aid will be used 

(which is a permissible restriction under 

Locke but not required under the Free 

Exercise Clause). Thus, a state could 

disallow or allow federal aid to be used 

for religious instruction under Locke. 

Some commenters argued that the 

current regulations fall within the latter 

category—that allowing religious 

individuals and entities to qualify for 

Federal aid would amount to promoting 

religion, because the recipients would 

use their aid to practice their religion. 

But those regulations deny eligibility 

based on a person’s membership in a 

religious order (see, e.g., 34 CFR 674.9), 

or because a person chose to perform 

volunteer work for a religious 

organization providing services to the 

community (see, e.g., 34 CFR 

674.35(c)(5)(iv)). These restrictions are 

on the basis of a person’s or entity’s 

religious identity; they are not use-based 

restrictions. Additionally, Locke v. 

Davey held that the government may 

refuse to use government funds for a 

degree in devotional theology; that 

decision does not require the 

government to refuse to do so. The 

Department’s determination of how to 

use any leeway allowed under Locke v. 

Davey must be guided by policy and 

legal considerations, including the 

statutory mandate of RFRA. 

The Supreme Court has long held that 

the government may furnish ‘‘general 

. . . benefits to all its citizens without 

regard to their religious belief.’’ Everson, 

330 U.S. at 16. In cases following 

Everson, the Court consistently affirmed 

that an important factor in upholding 

Government aid programs against an 

Establishment Clause attack is those 

programs’ ‘‘neutrality towards religion.’’ 

Good News Club v. Milford Central 

School, 533 U.S. 98, 114 (2001) (quoting 

Rosenburger, 515 U.S. at 839). The 

Constitution is ‘‘respected, not 

offended,’’ when the Government 

employs neutral criteria and extends 

benefits to ‘‘recipients whose ideologies 

and viewpoints, including religious 

ones, are broad and diverse.’’ 

Rosenberger, 515 U.S. at 839 (emphasis 

added). In Mitchell, a plurality of 

justices endorsed the bright-line rule 

that neutral, generally available 

Government aid does not violate the 

Establishment Clause. See 530 U.S. at 

809–14. Later, in Zelman v. SimmonsHarris, the Supreme Court held that a 

school voucher program did not need to 

exclude religious recipients to comply 

with the Establishment Clause. See 

Zelman, 536 U.S. 639, 653–60 (2002). 

The U.S. Department of Justice, Office of 

Legal Counsel has likewise held that, in 

some circumstances, the Government 

may provide aid to sectarian or religious 

entities.9 And finally, the Establishment 

Clause does not prohibit religious 

organizations from receiving 

Government benefits such as tax 

deductions and exemptions, which 

direct significant economic benefits to 

both religious and secular organizations, 

on an equal basis with secular 

organizations. See Walz, 397 U.S. at 

674; Zelman, 536 U.S. at 665–68 

(O’Connor, J., concurring) (discussing 

tax deductions and exemptions). 

Commenters also argued that the 

Department errs in relying on Trinity 

Lutheran. They argued that, according 

to footnote 3 in the decision, Trinity 

Lutheran applies only to the narrow 

factual circumstance of a church-run 

school seeking to compete for a 

playground resurfacing grant. 

But footnote 3 is not part of the 

majority opinion in Trinity Lutheran, 

because two of the six Justices in the 

majority opinion joined the opinion 

‘‘except as to footnote 3.’’ Trinity 

Lutheran, 137 S. Ct. at 2016. In any 

event, footnote 3 does not limit the force 

of the Court’s reasoning. 

The Court has long held that ‘‘[w]hen 

an opinion issues for the Court, it is not 

only the result but also those portions 

of the opinion necessary to that result 

by which we are bound.’’ Seminole 

Tribe of Florida v. Florida, 517 U.S. 44, 

67 (1996). And even broadly applicable 

principles discussed by the Supreme 

Court often lead to the creation of 

generally applicable legal rules. See 

Antonin Scalia, The Rule of Law as a 

Law of Rules, 56 U. Chi. L. Review 1175, 

1175–81 (1989). Indeed, in explaining 

why he did not join footnote 3, Justice 

Gorsuch asserted that the court’s cases 

are governed by general principles, 

rather than ad hoc improvisations.’’ 

Trinity Lutheran, 137 S. Ct. at 2023 

(quoting Elk Grove Unified School Dist. 

v. Newdow, 542 U.S. 1,25 (2004) 

(Gorsuch, J., concurring in part)). Here, 

the majority opinion in Trinity Lutheran 

recognized that the Court had 

‘‘repeatedly confirmed that denying a 

generally available benefit solely on 

account of religious identity imposes a 

penalty on the free exercise of religion 

that can be justified only by a state 

interest of the highest order.’’ Id. at 2019 

(majority op.). It confirmed that this 

principle applies to ‘‘the refusal to allow 

[a Church plaintiff]—solely because it is 

a church—to compete with secular 

organizations for a grant,’’ id. at 2022, 

and it rejected the argument that a 

‘‘policy preference for skating as far as 

possible from religious establishment 

concerns’’ could justify such refusal, id. 

at 2024. This reasoning is persuasive 

and applicable here. 

Changes: None. 

Comments: One commenter raised 

concerns that the Department subjected 

constitutional principles to negotiated 

rulemaking inappropriately and that 

there were few stakeholders with 

expertise in church and State issues on 

the negotiated rulemaking committee. 

Discussion: The HEA requires the 

Department to regulate all issues 

relating to title IV of the HEA through 

a negotiated rulemaking process. The 

Department followed the requirements 

of the HEA when negotiating these 

issues. To ensure adequate expertise on 

church and State issues, the Department 

created a subcommittee that met three 

times for a total of six days to discuss 

thoroughly the issues relating to church 

and State, including extensive 

discussion regarding the constitutional 

issues implicated by the proposed 

regulations. The subcommittee 

consisted of nine members, all of whom 

had extensive knowledge and 

experience with respect to church and 

State issues. Representatives of national 

organizations that have litigated both 

sides of these issues in Federal courts 

served on the subcommittee. 

Subcommittee representatives 

presented their proposals and analysis 

to the full committee multiple times 

during the negotiated rulemaking. Both 

sides of issues, those for and against the 

Department’s proposed amendments to 

the regulations, were presented to the 

full committee. Additionally, multiple 

members of the full committee worked 

for faith-based organizations or 

otherwise had experience working on 

church and State issues. 

The Department agrees with the 

commenters that the work of the 

negotiated rulemaking committee 

cannot overrule the Constitutional 

opinions of the U.S. Supreme Court, 

including cases like Trinity Lutheran. 

As a result, the Department has tailored 


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the final rule to be consistent with those 

opinions, as further described herein. 

Changes: None. 

Student Eligibility (§ 674.9); Student 

Eligibility (§ 675.9); Student Eligibility 

(§ 676.9); Eligibility of Borrowers for 

Interest Benefits on Stafford and 

Consolidation Loans (§ 682.301); 

Borrower Eligibility (§ 685.200); 

Determination of Eligibility for Payment 

(§ 690.75) 

Comments: The Department received 

comments on its proposal to remove 

provisions in §§ 674.9, 675.9, 676.9, 

682.301(a)(2), 685.200, and 690.75 that 

specify that a member of a religious 

order is considered to have no financial 

need if the religious order has as its 

primary objective the promotion of 

ideals and beliefs regarding a supreme 

being, requires its members to forgo 

monetary or other support substantially 

beyond the support its provides, and 

directs the member to pursue the course 

of study or provides subsistence support 

to its members. 

Some commenters agreed with the 

proposed removal, indicating that the 

current language violates the Free 

Exercise and the Free Speech Clauses. 

Specifically, commenters noted that 

religious observance, including vows of 

poverty and obedience, are protected by 

the First Amendment of the United 

States Constitution and should not be 

cited as a reason for exclusion from 

Federal student aid programs. 

Other commenters opposed the 

proposed removal, because they believe 

that without the current regulatory 

language, the Department would be 

subsidizing inherently religious 

activities, such as religious education 

and proselytizing, in violation of the 

Establishment Clause. One commenter 

further indicated that the procedural 

history of the regulations indicates that 

the rationale for the current regulations 

is not based on belief but on real-world 

considerations of financial status of 

individuals in religious orders who may 

receive financial subsidies even if they 

do not have an income. 

Discussion: The Department thanks 

commenters who supported the 

proposed change. The Department 

disagrees that the proposed regulations 

would cause the Department to 

subsidize inherently religious activities. 

The Department would merely be 

providing financial aid for otherwise 

eligible students to attend 

postsecondary education regardless of 

their membership in a religious order 

and without considering that order’s 

primary objective. Financial aid funds 

would go to individual students who 

have demonstrated financial need to 

attend postsecondary education and 

would not fund religious activities. An 

independent decision by a student aid 

recipient to participate in inherently 

religious activities does not create a 

government subsidy of those activities. 

The formulas for determining 

financial need in U.S. Code Part F 

consider subsidies received by students 

from any entity, including religious and 

non-religious entities. The current 

regulatory language that specifies that 

members of religious orders are 

presumed not to have need singles out 

such members for differential treatment 

and is likely not narrowly tailored to 

address a compelling interest. Such a 

provision also unnecessary for 

determining financial need as the 

formulas are themselves sufficient. 

Changes: None. 

Deferment of Repayment—Federal 

Perkins Loans Made Before July 1, 1993; 

Deferment of Repayment—NDSLs Made 

on or After October 1, 1993 

Comments: Many commenters 

supported proposed changes to 

§§ 674.35 and 674.36 that would remove 

language that denies deferment of 

repayment of certain Federal loans for 

borrowers working as volunteers if their 

volunteer duties include giving religious 

instruction, conducting worship 

services, proselytizing, or fundraising to 

support religious activities. Many 

commenters agreed with the Department 

that in some cases the provision of 

secular services is inextricably 

intertwined with inherently religious 

activities and that deferment provisions 

in the current regulations may violate 

the Free Exercise and Free Speech 

Clauses and RFRA. These commenters 

noted that the Federal government will 

not violate the Establishment Clause if 

it permits volunteers engaged in 

religious activities to defer loan 

repayment based on religiously neutral 

criteria. The commenters cited Zelman 

v. Simmons-Harris, 536 U.S. 639 (2002), 

Mitchell v. Helms 530 U.S. 793 (2000), 

and other Supreme Court cases in 

support of their position. 

Other commenters opposed the 

removal of these provisions, indicating 

that allowing a borrower to be eligible 

for subsidies if the borrower works on 

inherently religious activities would be 

directly subsidizing individuals engaged 

in religious activities in violation of the 

Establishment Clause. 

Discussion: The Department thanks 

the commenters for their support. The 

Department agrees with the commenters 

who argued that the Establishment 

Clause would not be violated by the 

removal of these provisions. The 

Department believes that removal of 

these provisions is necessary to avoid 

violations of individuals’ rights to freely 

exercise their religions and their free 

speech rights. These provisions do not 

violate the Establishment Clause 

because the Supreme Court has long 

held that the government may furnish 

general benefits to all its citizens 

without regard to their religious belief 

or their membership in a particular 

religious organization or sect. See 

Everson, 330 U.S. at 16 (holding that the 

State ‘‘cannot exclude individual 

Catholics, Lutherans, Mohammedans, 

Baptists, Jews, Methodists, Nonbelievers, Presbyterians, or the members 

of any other faith, because of their faith, 

or lack of it, from receiving the benefits 

of public welfare legislation.’’). In cases 

following Everson, the Court 

consistently affirmed that an important 

factor in upholding Government aid 

programs against an Establishment 

Clause attack is those programs’ 

‘‘neutrality towards religion.’’ Good 

News Club v. Milford Central School, 

533 U.S. 98, 114 (2001) (quoting 

Rosenburger, 515 U.S. at 839). The 

Constitution is ‘‘respected, not 

offended,’’ when the Government 

employs neutral criteria and extends 

benefits to ‘‘recipients whose ideologies 

and viewpoints, including religious 

ones, are broad and diverse.’’ 

Rosenberger, 515 U.S. at 839 (emphasis 

added). In Mitchell, a plurality of 

justices endorsed the bright-line rule 

that neutral, generally available 

government aid does not violate the 

Establishment Clause. See 530 U.S. at 

809–14. 

Under the current regulations, a 

borrower may be eligible for deferment 

if working as a full-time volunteer for a 

tax-exempt organization providing 

services to low-income persons and 

their communities to assist them in 

eliminating poverty and poverty-related 

human, social, and environmental 

conditions for at least one year. 

However, the regulation disqualifies 

that same borrower from deferment if he 

or she, as part of his or her duties, gives 

religious instruction, conducts worship 

services, engages in religious 

proselytizing, or engages in fundraising 

to support religious activities. The 

regulations thus disfavor borrowers 

participating in otherwise-eligible 

public services merely because that 

public service is performed from a 

religious perspective. For some 

borrowers, these restrictions may also 

impose a substantial burden on their 

free exercise of religion by forcing them 

to choose between such religious 

exercise and eligibility for loan 

deferments. No compelling government 


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10See also Am. Jewish Congress v. Corp. for Nat’l 

& Cmty. Serv., 399 F.3d 351 (D.C. Cir. 2005) 

(government agency placing teachers in religious 

schools did not violate Establishment Clause when 

some teachers chose to teach religion as well as 

secular subjects). 

interest warrants the imposition of such 

burdens. Ultimately, the eligibility 

requirements in these final regulations 

maintain the government’s stance of 

neutrality towards religion by not 

disfavoring a particular type of public 

service. 

The Supreme Court has noted the 

distinction, for Establishment Clause 

purposes, between direct provision of 

government aid to a religious programs 

and indirect government aid that flows 

to religious programs based on private 

choice in its Establishment Clause cases. 

For example, in Zelman v. SimmonsHarris, the Supreme Court held that a 

school voucher program did not need to 

exclude religious recipients to comply 

with the Establishment Clause where 

funding would only reach such 

recipients following the private choice 

of the individual using the voucher. See 

Zelman, 536 U.S. 639, 653–60 (2002). 

Likewise, in this case, the borrower 

receiving the benefit of loan deferment 

under the regulation makes a private 

choice between different volunteer 

options in the community and therefore 

does not create an Establishment Clause 

problem by choosing to volunteer with 

a religious entity performing religious 

tasks. As a result of the intervening 

private choice of the borrower, ‘‘no 

imprimatur of state approval can be 

deemed to have been conferred on any 

particular religion, or on religion 

generally’’ by the borrower’s receipt of 

a deferment for volunteer work. See 

Zelman, 536 U.S. at 650 (internal 

citations, quotation marks omitted).10

Changes: None. 

Eligible Employers and General 

Conditions and Limitation on 

Employment (§ 675.20) 

Comments: The Department received 

comments on proposed changes to 

§ 675.20 that would replace language in 

the FWSP regulations with language 

from § 443(b)(1)(C) of the HEA to clarify 

that work performed under the FWSP 

may ‘‘not involve the construction, 

operation, or maintenance of so much of 

any facility as is used or is to be used 

for sectarian instruction or as a place for 

religious worship.’’ Several commenters 

stated that the statutory language is 

problematic but is clearer than the 

current regulatory language. 

One commenter indicated that both 

the statute and the regulation fail to 

define ‘‘sectarian instruction.’’ That 

commenter wondered whether the term 

includes only inherently religious 

instruction or whether it also includes 

efforts to integrate religious convictions 

into other subjects. 

Several commenters indicated that the 

statutory language includes unjustified 

discrimination against religion, religious 

individuals, and religious activities in 

violation of the Free Exercise and Free 

Speech Clauses as well as RFRA. One 

commenter noted that the Department 

has the authority and an independent 

duty to obey the Constitution and RFRA 

regardless of the statutory language in 

the HEA. 

One commenter contended that the 

changes would allow FWSP students to 

serve in facilities dedicated solely to 

religious functions which would violate 

the separation of church and State. 

Discussion: The Department agrees 

with commenters that it has an 

independent duty to obey the 

Constitution and RFRA. The 

Department does not believe the statute 

is clearly unconstitutional under current 

Supreme Court precedent. Even when 

the Government has established a 

secular, neutral aid program, it may 

retain an interest in defining the 

program to exclude certain religious 

uses. See Religious Restrictions on 

Capital Financing for Historically Black 

Colleges and Universities, 2019 WL 

4565486 O.L.C. at 19. Under Locke v. 

Davey, the government—in this case, 

Congress—may lawfully decline to 

subsidize religious activity. See Locke, 

540 at 720–21. It therefore does not 

appear that the FWSP restriction 

violates the Free Exercise Clause. 

Nor does the Department believe that 

the restriction necessarily runs counter 

to RFRA. It is true that RFRA applies 

retrospectively and prospectively to ‘‘all 

Federal law, and the implementation of 

that law, whether statutory or otherwise, 

and whether adopted before or after’’ its 

effective date, 42 U.S.C. 2000bb–3(a), 

including the FWSP restriction here. On 

the one hand, because the restriction is 

religious in nature, it is possible that the 

restriction could substantially burden 

the exercise of religion by institutions of 

higher education and/or individual 

student participants. The restriction 

appears to be aimed at preventing the 

use of government funds to support 

religious activities. However, the 

restriction is neither required by the 

Establishment Clause in light of the 

need for intervening private choice by 

an institution of higher education and 

an individual student participant before 

program funds could be linked with 

religious activity, see Zelman, 536 U.S. 

639, 653–60 (2002), nor is it a 

compelling government interest for 

purposes of RFRA, as any remaining 

‘‘policy preference for skating as far as 

possible from religious establishment 

concerns’’ cannot qualify as a 

compelling government interest, see 

Trinity Lutheran, 137 S. Ct. at 2024. 

Thus, under RFRA the Department 

cannot enforce the FWSP restriction 

against any person whose exercise of 

religion is substantially burdened by 

such application. As a result, the 

Department has added language to that 

effect in the regulation to make clear 

how RFRA applies. Of course, even in 

the absence of such additional clarifying 

language, the Department interprets all 

of its statutes and regulations through 

the lens of RFRA because none of its 

statutes contains an explicit exemption 

from RFRA. 42 U.S.C. 2000bb–3(b). 

To the extent that the FWSP 

restriction does not substantially burden 

a person’s exercise of religion, however, 

it does not appear to violate the 

Constitution or RFRA. 

In otherwise amending the regulation 

to conform to the statute, the 

Department intends to provide as much 

clarity and flexibility as possible within 

the confines of the HEA and to ensure 

adherence to the statute. Chapels and 

other religious structures are often part 

of larger multi-use facilities on college 

campuses. The Department wishes to 

clarify that FWSP students may 

construct, operate, or maintain portions 

of multiuse structures that are not 

dedicated solely to religious purposes. 

The Department disagrees with 

commenters who claimed that, under 

the statutory language, FWSP students 

would be involved in the construction, 

operation, or maintenance of facilities 

dedicated solely to religious functions. 

The statutory language precludes such 

opportunity by specifying that work 

performed under the FWSP may ‘‘not 

involve the construction, operation, or 

maintenance of so much of any facility 

as is used or is to be used for sectarian 

instruction or as a place for religious 

worship.’’ Therefore, if a building is 

used solely for sectarian instruction or 

as a place for religious worship, FWSP 

employment may not include the 

construction, operation, or maintenance 

of that building. For large, multi-use 

structures, however, FWSP employment 

may include the construction, 

operation, or maintenance of that 

building. 

While neither the statute nor the 

current regulations define the term 

‘‘sectarian instruction,’’ the Department 

follows a similar definition to that set 

forth in a published opinion by the 

Department of Justice’s Office of Legal 

Counsel. See Religious Restrictions on 

Capital Financing for Historically Black 

Colleges and Universities, 2019 WL 


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4565486 O.L.C. at 18. In its opinion, the 

Office of Legal Counsel defined the 

word ‘‘sectarian’’ in the phrase 

‘‘sectarian activities’’ to mean 

‘‘devotional activities.’’ Id. According to 

Black’s Law Dictionary, sectarian 

instruction would ordinarily be defined 

as instruction that ‘‘supports a 

particular religious group and its 

beliefs,’’ 1557 (10th ed. 2014), and 

Webster’s Third would define it as 

instruction that has ‘‘the characteristics 

of one or more sects of a religious 

character,’’ Webster’s Third New 

International Dictionary 2052 (2002). 

Thus, instruction that is predominately 

devotional and religious is ‘‘sectarian 

instruction.’’ Sectarian instruction 

would include instruction such as 

Christian or Jewish homilies or Islamic 

khutbahs. Instruction related to the 

provision of generally secular services 

does not constitute sectarian 

instruction, including various types of 

counseling or educational instruction 

that may include some sectarian or 

religious content but that is not 

predominately religious or devotional in 

nature. Individuals or organizations may 

integrate religious ideas or teachings 

into otherwise secular instruction 

without engaging in sectarian 

instruction. 

The Department concludes that this 

reading of the restriction is 

independently justified in light of the 

canon of constitutional avoidance. See, 

e.g., Clark v. Martinez, 543 U.S. 371, 

381–82 (2005). A broad reading of the 

restriction could potentially cover all 

buildings where instruction takes place 

at a religious institution, potentially 

converting the restriction from a usebased restriction into the kind of status 

based restriction expressly prohibited in 

Trinity Lutheran, 137 S. Ct. at 2023. In 

order to avoid this potential Free 

Exercise Clause problem, the 

Department construes the restriction 

narrowly to only cover instruction that 

is predominately devotional and 

religious. 

In addition, the Department’s 

interpretation of ‘‘sectarian instruction’’ 

is independently supported by RFRA. A 

broad reading of the restriction could 

cover all buildings where instruction 

takes place at a religious institution, 

potentially forcing the institution to 

choose between participation in the 

FWSP and continuing in its religious 

exercise. This would place a substantial 

burden on such institutions’ exercise of 

religion without advancing any 

compelling government interest by the 

least restrictive means and would 

therefore run counter to RFRA. See, e.g., 

Hobby Lobby Stores, Inc. v. Sebelius, 

723 F.3d 1114, 1141 (10th Cir. 2013) (en 

banc), aff’d sub nom. Burwell v. Hobby 

Lobby Stores, Inc., 573 U.S. 682 (2014). 

A denial of, or condition on the receipt 

of, government benefits may 

substantially burden the exercise of 

religion if such denial or condition 

exerts significant pressure on an 

adherent to modify his or her religious 

observance or practice. See U.S. Att’y 

Gen. Memorandum on Federal Law 

Protections for Religious Liberty (Oct. 6, 

2017); Sherbert v. Verner, 374 U.S. 398, 

405–06 (1963); Hobbie v. 

Unemployment Appeals Comm’n of 

Fla., 480 U.S. 136, 141 (1987); Thomas 

v. Review Board of Indiana Employment 

Security Div., 450 U.S. 707, 717–18 

(1981). And for the reasons explained 

above, such a broad restriction would 

neither be required by the Establishment 

Clause, nor justified by a compelling 

governmental interest. A narrower 

reading of ‘‘sectarian instruction’’ 

avoids these problems and, thus, would 

appear to be more consistent with 

congressional intent to impose this 

restriction without exempting it from 

RFRA. 

Changes: The Department amends the 

proposed regulation to specify the 

narrow definition of sectarian 

instruction and to include the exception 

for situations involving a substantial 

burden on a person’s exercise of religion 

under RFRA. 

Deferment (§ 682.210) 

Comments: In response to a directed 

question in the NPRM, the Department 

received several comments stating that 

in order to provide consistent treatment 

of deferments across loan programs, we 

should remove § 682.210(m)(1)(iv), 

which states that certain FFEL loans 

cannot be deferred for volunteer work 

unless the borrower ‘‘does not as part of 

his or her duties give religious 

instruction, conduct worship services, 

engage in religious proselytizing, or 

engage in fund-raising to support 

religious activities.’’ Commenters 

indicated that it would be unfair and 

inconsistent to treat eligibility for loan 

deferment under the FFEL program 

differently than under the Perkins and 

NDSL programs. 

Discussion: The Department agrees 

with commenters that there should be 

consistent treatment of loan deferments 

across loan programs. 

Changes: The Department has 

removed § 682.210(m)(1)(iv). 

Public Service Loan Forgiveness 

Program (§ 685.219) 

Comments: The Department received 

many comments on the proposed 

changes to § 685.219 relating to the 

PSLF program. In particular, 

commenters were concerned about 

proposed § 685.219(c)(4), which would 

provide that time spent participating in 

religious instruction, worship services, 

or any form of proselytizing while 

employed by a non-profit organization 

under section 501(c)(3) of the Internal 

Revenue Code would not be included 

toward meeting the full-time 

requirement. 

Many commenters asserted that both 

the original regulatory language and the 

proposed change violate RFRA, because 

the regulations force borrowers to 

choose between exercising their religion 

and obtaining a meaningful government 

benefit. Also, commenters stated that 

the proposed regulations would 

unlawfully continue to exclude those 

who are participating in religious 

exercise and speech from qualifying for 

the generally available benefit of loan 

forgiveness. Commenters believed that, 

under the proposed rules, borrowers 

could be compelled to work for secular 

organizations over religious 

organizations in order to obtain loan 

forgiveness. From a practical 

perspective, commenters noted that 

religious activities may be intertwined 

with secular work, making it difficult to 

clearly separate out the hours and 

creating uncertainty and confusion on 

the part of the applicants and employing 

organizations. These commenters 

indicated that religious activities should 

not be excluded in the calculation of 

work hours for PSLF. 

Some commenters stated that the 

Establishment Clause does not require 

borrowers eligible for loan forgiveness 

to exclude religious activities from their 

full-time work hours. Commenters also 

contended that the proposed provision 

would raise a significant threat of 

entanglement under the Establishment 

Clause when the government tries to 

evaluate whether a religious 

organization’s employees are properly 

defining work that touches on religious 

education or worship. 

Further, commenters asserted that 

because the proposed language is not 

the least restrictive means of advancing 

any government interest, the language 

also violates RFRA. 

One commenter also raised concerns 

that the terms ‘‘religious instruction,’’ 

‘‘worship services,’’ and ‘‘proselytizing’’ 

are not defined and are not workable. 

For example, the commenter argued that 

worship cannot be separated from the 

teaching of moral values, and that it is 

not clear whether proselytizing includes 

secular viewpoints. The commenter 

stated that use of these terms has the 

effect of excluding people engaged in 

religious speech. The commenter argued 


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11Zelman v. Simmons-Harris, 536 U.S. 639, 652 

(2002); Mitchell v. Helms, 530 U.S. 793, 829 (2000); 

Rosenberger v. Rector & Visitors of Univ. of 

Virginia, 515 U.S. 819, 839 (1995); Everson v. Bd. 

of Ed. of Ewing Twp., 330 U.S. 1, 17 (1947). 

that it would be more appropriate to 

treat all applicants for PSLF equally. 

Other commenters expressed concern 

that it would violate the Establishment 

Clause if borrowers received loan 

forgiveness to work on inherently 

religious activities. One commenter 

argued that the Department’s 

justification for this proposal 

misinterprets the decision in Trinity 

Lutheran and that RFRA does not apply 

to this situation in which the 

Government is not preventing the 

borrower from performing the desired 

religious activities and does not deny 

benefits to religious persons engaging in 

qualified work. These commenters 

urged the Department to maintain the 

proposed language as published in the 

NPRM. 

Commenters stated that using RFRA 

to create a religious exemption for PSLF 

work requirements is at odds with the 

tailored approach required by RFRA, 

and that RFRA does not give the 

Department authority to adjudicate 

claims it anticipates might happen and 

create blanket exemptions. Instead, 

RFRA requires a ‘‘careful, 

individualized, and searching review.’’ 

Many commenters encouraged the 

Department to adopt the proposed 

language or to maintain the current 

regulatory language. 

Discussion: The Department is 

persuaded that the proposed regulations 

requiring borrowers to exclude work 

spent on religious activities from fulltime work is not required by the 

Establishment Clause and may pose 

unnecessary burdens. The 

Establishment Clause does not require 

that borrowers work solely for secular 

organizations to obtain loan 

forgiveness.11

The Department also recognizes that 

there are practical difficulties associated 

with separating religious work from 

public service work, as the two may not 

always be cleanly divided. There would 

be burdens on both the borrowers in 

attempting to record the different time 

spent on religious activities and on the 

Department in overseeing such a 

restriction. Moreover, concerns about 

potentially overbroad interpretations of 

the religious activities that could not 

count toward full-time work could 

dissuade borrowers from working for 

religious organizations or pressure them 

to forgo the economic benefits that flow 

from loan forgiveness. And to the extent 

that the proposed language was 

interpreted broadly to disqualify from 

loan forgiveness individuals who hold 

particular views about the religious 

nature of their public service—for 

example, those who view their service 

as a form of proselytization even if it 

contains no explicit call to conversion— 

would raise Free Exercise or RFRA 

concerns. As a result, the Department 

has not included proposed 

§ 685.219(c)(4) in the final regulations. 

The final regulations will set religious 

individuals and entities on equal footing 

with their secular counterparts by 

allowing such individuals and entities 

to qualify for the same aid already 

available to nonreligious individuals 

and entities. 

The Department does not agree with 

commenters who argued that RFRA is 

not implicated by the Department’s 

current rules excluding religious 

individuals and entities from 

participation in generally available 

benefit programs. Nor does the 

Department agree with commenters who 

argued that the Department is using 

RFRA to create overly broad, blanket 

exceptions. The rule is designed to both 

correct existing RFRA violations under 

the current regulations and to prevent 

future violations. Congress has tasked 

the Department with the duty to ensure 

that the Department’s regulations do not 

substantially burden a person’s exercise 

of religion (absent a compelling 

government interest and a showing that 

the burden is the least restrictive means 

of furthering that interest). 42 U.S.C. 

2000bb, et seq. This mandate, as 

previously discussed, applies to ‘‘all 

Federal law, and the implementation of 

that law, whether statutory or 

otherwise.’’ 42 U.S.C. 2000bb–3(a). 

Thus, the Department’s establishment of 

this regulation clearly falls under the 

mandate of RFRA. 

Because the current regulations 

discriminate against religious groups 

and deny individuals the ability to 

participate in important government 

programs on the basis of their religious 

status, the current regulations likely 

amount to a substantial burden on those 

entities’ exercise of religion. 

RFRA defines ‘‘religious exercise’’ as 

‘‘any exercise of religion, whether or not 

compelled by, or central to, a system of 

religious belief.’’ 42 U.S.C. 2000bb–2(4) 

(citing 42 U.S.C. 2000cc–5). The current 

rules impose a ‘‘penalty’’ on these 

individuals’ free exercise of religion, 

Trinity Lutheran, 137 S. Ct. at 2021— 

which they engage in by becoming 

members of religious orders, attending 

religious institutions, participating in or 

working at religious organizations, 

among other ways—by requiring them 

to ‘‘choose between their religious 

beliefs and receiving a government 

benefit.’’ Id. at 2023 (quoting Locke, 540 

U.S. at 720–21); see Sherbert v. Verner, 

374 U.S. 398, 404 (1963) (finding a 

substantial burden where it was 

‘‘apparent that appellant’s declared 

ineligibility for benefits derives solely 

from the practice of her religion,’’ 

forcing her ‘‘to choose between 

following the precepts of her religion 

and forfeiting benefits, on the one hand, 

and abandoning one of the precepts of 

her religion in order to accept work, on 

the other hand’’); see also 42 U.S.C. 

2000bb(b)(1) (‘‘The purposes of this 

chapter are—(1) to restore the 

compelling interest test as set forth in 

Sherbert v. Verner, 374 U.S. 398 (1963) 

and Wisconsin v. Yoder, 406 U.S. 205 

(1972) and to guarantee its application 

in all cases where free exercise of 

religion is substantially burdened 

. . . .’’). 

And the Department’s status-based 

restrictions are neither necessary to 

further a compelling government 

interest, nor are they the least restrictive 

means of furthering any such interest. 

Therefore, RFRA would require the 

Department to alleviate any such 

substantial burden. 

Some commenters believe that the 

Department’s changes to eligibility 

requirements for certain aid would have 

the effect of advancing religion. The 

Department’s aid will not advance 

religion, nor do the Department’s 

changes require aid to be used for 

religious purposes. Rather, the 

Department’s aid will advance public 

service generally, by eliminating a 

condition on eligibility for loan 

forgiveness that might have deterred 

individuals from performing such 

volunteer work, and it will 

accommodate the religious exercise of 

those who seek to perform volunteer 

work for a religious organization. 

Importantly, the Department’s final 

regulations correct rules that singled out 

individuals employed by organizations 

that are engaged in religious activities 

for disfavored treatment. 

Additionally, the Supreme Court has 

repudiated the suggestion, advanced by 

some commenters, that the 

Establishment Clause bars government 

aid from flowing from religiously 

neutral government programs to 

religious institutions. See, e.g., Mitchell 

v. Helms, 530 U.S. 793, 835 (plurality 

opinion) (overruling Wolman v. Walter, 

433 U.S. 229 (1977) and Meek v. 

Pittenger, 421 U.S. 349 (1975)); id. at 

837 (O’Connor, J., concurring in the 

judgment) (same); Agostini v. Felton, 

521 U.S. 203, 235 (overruling Aguilar v. 

Felton, 473 U.S. 402 (1985) and School 

District of the City of Grand Rapids v. 

Ball, 473 U.S. 373 (1985)). 


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In addition, under the principle set 

forth in Zelman, a benefit program like 

PSLF need not exclude religious 

recipients to comply with the 

Establishment Clause where funding 

would only reach such recipients 

following the private choice of the 

individual using the benefit. See 

Zelman, 536 U.S. 639, 653–60 (2002). 

Likewise, in this case, the borrower 

receiving the benefit of PSLF under the 

regulation makes a private choice 

between different volunteer options in 

the community and does not create an 

Establishment Clause problem by 

choosing to volunteer with a religious 

entity that performs religious tasks. As 

a result of the intervening private choice 

of the borrower, ‘‘no imprimatur of state 

approval can be deemed to have been 

conferred on any particular religion, or 

on religion generally.’’ Zelman, 536 U.S. 

at 650 (internal citations, quotation 

marks omitted). 

Although the current regulations do 

not raise an Establishment Clause 

problem, they do raise a Free Exercise 

Clause concern. In Trinity Lutheran, the 

Court reiterated that the Free Exercise 

Clause applies to government benefits 

and funding. The Court in that case 

rejected the State’s interest in ‘‘skating 

as far as possible from religious 

establishment concerns’’ as a basis for 

categorically excluding a religious 

organization from a generally available 

funding program. Id. at 2021. The Court 

applied ‘‘the most exacting scrutiny’’ to 

the government program, finding that it 

‘‘expressly discriminate[d]’’ against an 

entity that would be otherwise eligible 

for the government grant but for that 

entity’s religious character. Id. 

A materially similar fact pattern exists 

in the current regulations: But for the 

religious character of the public service 

organization that a borrower works for 

and the types of religious activities the 

organization performs, the borrower 

would have qualified for loan 

forgiveness under title IV. The benefit 

available under § 685.219 is generally 

available, except to borrowers who work 

for non-profit organizations that are 

engaged in religious activities. Such an 

exclusion is based on the religious 

status of an organization and, therefore, 

is unconstitutional. Some commenters 

argue that the Department errs in relying 

on Trinity Lutheran. They contend that, 

according to footnote 3 in the decision, 

Trinity Lutheran applies only to the 

narrow factual circumstance of a 

church-run school seeking to compete 

for a playground resurfacing grant. 

As discussed above in the 

Department’s response to general 

comments on Faith-Based Entities, 

footnote 3 does not undermine the force 

of the reasoning in Trinity Lutheran and 

was only joined by four Justices. Trinity 

Lutheran, 137 S. Ct. at 2016. 

Changes: The Department has 

removed proposed § 685.219(c)(4), 

which would have prohibited PSLF 

applicants from counting hours spent on 

religious instruction, worship, 

proselytizing, and fund raising towards 

the full-time work requirement of the 

PSLF program. 

How does a State administer its 

community service-learning job 

program? (§ 692.30) 

Comments: Several commenters 

indicated that they have the same 

concerns about the proposed changes to 

§ 692.30 relating to the LEAP program 

that they raised with respect to § 675.20 

relating to the FWSP. 

Discussion: See the discussion on 

§ 675.20 above. 

Changes: None. 

Who may provide GEAR UP services to 

students attending private schools? 

(§ 694.6) 

Comments: All commenters who 

opined on § 694.6 supported the 

Department’s proposal with respect to 

the treatment of private schools in the 

GEAR UP program. Commenters 

indicated that the proposal provides 

additional clarification and retains 

important protections and guidelines for 

serving GEAR UP students in private 

schools. Commenters noted that the 

proposal retains the requirement that 

government funded services be ‘‘secular, 

neutral, and nonideological’’ and thus 

maintains boundaries required by the 

Establishment Clause. 

Discussion: The Department thanks 

commenters for their support. 

Changes: None. 

What are the requirements that a 

Partnership must meet in designating a 

fiscal agent for its project under this 

program? (§ 694.10) 

Comments: Many commenters 

supported the proposed changes to 

§ 694.10 to remove language prohibiting 

pervasively sectarian organizations from 

serving as fiscal agents in GEAR UP 

grants. Some noted that it is 

inappropriate for the government to 

make determinations as to whether an 

institution is pervasively sectarian. 

Others noted that the term ‘‘pervasively 

sectarian’’ is outdated and reflects an 

anti-religious bias. Commenters also 

noted that the proposed regulations 

reflect current case law regarding the 

Establishment Clause and the Free 

Exercise Clause. Others indicated that 

they support the proposed change in 

combination with the retention of the 

requirement that benefits provided to 

GEAR UP students must be ‘‘secular, 

neutral, and nonideological.’’ 

Discussion: The Department thanks 

commenters for their support. 

Changes: None. 

Teach Grant Program 

General Comments 

Comments: In general, commenters 

supported the proposed regulations. 

Commenters believed that, by 

simplifying the requirements, the 

proposed regulations would reduce the 

number of TEACH Grants inadvertently 

converted to Direct Unsubsidized Loans. 

They also felt that changes would be 

helpful for TEACH Grant recipients, 

including expanding and strengthening 

counseling and notification provisions, 

providing additional conditions under 

which the period for completing the 

teaching service obligation may be 

temporarily suspended, providing a 

reconsideration process for TEACH 

Grants inadvertently converted to loans, 

and expanding options for satisfying the 

teaching service obligation. 

Discussion: We thank the commenters 

for their support. 

Changes: None. 

Comments: Some commenters 

expressed concerns about servicer and 

institutional accountability regarding 

the administration of the TEACH Grant 

program and recommended that the 

Department impose liabilities and 

escalating consequences on servicers 

and institutions that fail to properly 

carry out their responsibilities. 

Discussion: We appreciate the 

commenters’ concerns. However, these 

concerns are outside the scope of this 

regulatory effort. The Department holds 

servicers accountable through 

contractual agreements and can impose 

escalating consequences and even 

terminate a contract of a servicer that 

has failed to properly carry out its 

responsibilities. Institutions can only 

disburse TEACH Grants if they maintain 

institutional eligibility to disburse 

Federal student aid. One requirement 

for institutional eligibility is that an 

institution must satisfy standards of 

administrative capability. Failure to do 

so can result in termination of the 

institution’s eligibility. In addition, we 

note that the Department’s Federal 

Student Aid (FSA) office maintains a 

Feedback System, which includes a 

formal process for borrowers to report 

issues or file complaints about their 

loan experiences, including problems 

with servicing. Borrowers may also 

elevate complaints to the FSA 

Ombudsman Group—a neutral and 

confidential resource available to 


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49808 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

borrowers to resolve disputes related to 

their loans. 

Changes: None. 

Definitions (§ 686.2) 

Highly Qualified 

Comments: A couple of commenters 

expressed concern that a reference to 

section 602(10) of the Individuals with 

Disabilities Education Act (IDEA) was 

removed from the definition of ‘‘highly 

qualified.’’ The commenters stated that 

this section should continue to be 

referenced in the ‘‘highly qualified’’ 

definition. 

Discussion: We agree with the 

commenters. The reference to section 

602(10) of the IDEA was inadvertently 

removed. 

Changes: We have restored the 

reference to section 602(10) of the IDEA. 

Comments: A couple of commenters 

stated their belief that it was 

inappropriate for the TEACH Grant 

Program regulations to use language 

from the teacher loan forgiveness 

provisions in sections 428J(g)(3) and 

460(g)(3) of the HEA to describe how 

private school teachers who are exempt 

from State certification requirements 

can meet the highly qualified teacher 

standards. The commenters noted that 

the TEACH Grant program is designed 

to incentivize highly qualified 

educators, who receive hundreds of 

hours of professionally supervised preservice field experiences and undergo a 

comprehensive, standards-based 

curriculum to teach in the most 

underserved schools in the most 

undersupplied subject areas. 

Discussion: We disagree with the 

commenters. As we explained in the 

NPRM, teaching in an eligible non-profit 

private school can be qualifying service 

for purposes of satisfying the TEACH 

Grant service obligation, but the 

definition of ‘‘highly qualified’’ in the 

Elementary and Secondary Education 

Act (ESEA) does not address private 

school teachers. Therefore, we are 

expanding the definition of ‘‘highly 

qualified’’ to include the language from 

sections 428J(g)(3) and 460(g)(3) of the 

HEA that describes how private school 

teachers who are exempt from State 

certification requirements can meet the 

highly-qualified teacher standards for 

teacher loan forgiveness purposes. We 

believe it is appropriate to incorporate 

this language, since student loan 

borrowers seeking teacher loan 

forgiveness must meet the same highly 

qualified teacher standards that apply to 

TEACH Grant recipients. 

Changes: None. 

Agreement To Serve or Repay (§ 686.12) 

Comments: A couple of commenters 

expressed concern with § 686.12 based 

on their belief that a TEACH Grant 

recipient who completes a TEACH 

Grant-eligible educator preparation 

program in the middle of the academic 

year will lose a full calendar year of the 

eight-year period for satisfying the 

service obligation because of the 

requirement that a teacher teach fulltime for a full school year. 

Discussion: Under these conditions, a 

grant recipient who starts teaching midyear would not lose a full calendar year 

of the eight-year period for completing 

the service obligation. The HEA requires 

that a grant recipient serve as a full-time 

teacher for a total of not less than four 

academic years within eight years after 

completing the course of study for 

which the TEACH grant was received. 

The current regulations, in part, define 

‘‘academic year or its equivalent for 

elementary and secondary schools 

(elementary or secondary academic 

year)’’ to be one complete school year, 

or two complete and consecutive halfyears from different school years, 

excluding summer sessions, that 

generally fall within a 12-month period. 

To clarify this in the regulations, in the 

NPRM we proposed to replace the 

reference to ‘‘eight calendar years’’ with 

‘‘eight years’’. 

Changes: None. 

Comments: A couple of commenters 

felt that the grace period for seeking 

qualifying employment should be 

extended to the earlier of—(1) one year 

from the date a recipient is no longer 

enrolled in a qualifying TEACH Grant 

program, or (2) the date the recipient 

begins qualifying employment in a 

TEACH-eligible school and subject area. 

Discussion: The regulations do not 

require a TEACH Grant recipient to 

begin qualifying teaching service within 

a certain timeframe after the recipient 

has ceased to be enrolled in the program 

of study for which he or she received a 

TEACH Grant. Rather, a grant recipient 

must begin and maintain qualifying 

teaching within a timeframe that will 

allow the recipient to complete the fouryear service obligation within the eightyear service obligation period. 

Changes: None. 

Counseling Requirements (§ 686.32) 

Comments: A couple of commenters 

disagreed with the policy reflected in 

the proposed regulations that prohibited 

the reversal of the conversion of a 

TEACH Grant to a loan if the grant 

recipient had requested the conversion. 

The commenters believed that the 

circumstances that led a grant recipient 

to request a conversion could later 

change such that the grant recipient may 

now want to teach and satisfy the 

service obligation. In such cases, the 

commenters felt that the grant recipient 

should be able to have the conversion 

reversed so that the recipient could 

teach and help address the nation’s 

teacher shortages. 

Discussion: We agree that a grant 

recipient who previously requested 

conversion should be able to have the 

conversion reversed, so that the 

recipient could perform qualifying 

teaching to satisfy the TEACH Grant 

service obligation. This cannot be an 

open-ended opportunity, however. The 

grant recipient must still be able to 

fulfill the service obligation within eight 

years from when the recipient ceased 

enrollment at the institution where the 

recipient received the TEACH grant or, 

in the case of a student who received a 

TEACH Grant at one institution and 

subsequently transferred to another 

institution and enrolled in another 

TEACH Grant-eligible program, within 

eight years of ceasing enrollment at the 

other institution. The eight-year period 

for completing the required four years of 

teaching does not include periods of 

suspension, which the recipient could 

apply for retroactively, if applicable. 

However, the eight-year period will 

include the period when the grant was 

in loan status. If a grant recipient 

requests reversal of a prior voluntary 

conversion at a point when the recipient 

would no longer have enough time to 

complete the service obligation during 

the eight-year period unless he or she 

qualifies for a retroactive suspension, an 

application for suspension will need to 

be submitted and approved prior to 

reconversion. This option should be 

explained to the recipient during initial, 

subsequent, exit, and conversion 

counseling. 

Changes: We have added new 

§ 686.43(a)(8) to provide that, in the case 

of a grant recipient whose TEACH Grant 

was converted to a loan in accordance 

with § 686.43(a)(1)(i), the Secretary will 

reconvert the loan to a TEACH Grant if 

requested by the grant recipient, and 

restore the recipient’s TEACH Grant 

service obligation, if there is sufficient 

time remaining for the grant recipient to 

complete the required four academic 

years of qualifying teaching service 

within eight years from the date the 

grant recipient ceased enrollment at the 

institution where the recipient received 

the grant or, in the case of a student who 

received a TEACH Grant at one 

institution and subsequently transferred 

to another institution and enrolled in 

another TEACH Grant-eligible program, 

within eight years of ceasing enrollment 


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at the other institution. New 

§ 686.43(a)(8) further states that the 

eight-year period for completing the 

required four years of teaching does not 

include periods of suspension for which 

the recipient qualifies under § 686.41. It 

also provides that a period of 

suspension for which the recipient 

applies and is determined to be eligible 

may be applied retroactively. If the 

recipient would not have sufficient time 

remaining to complete the service 

obligation within the eight-year period 

the Secretary will not reconvert the 

recipient’s loan to a TEACH Grant 

unless the recipient first requests and is 

determined to be eligible for a 

retroactive suspension. 

We have removed the language in the 

proposed regulations addressing the 

initial, subsequent, and exit counseling 

requirements which state that the 

conversion of a TEACH Grant to a loan 

cannot be reversed if the grant recipient 

requested the conversion, and have 

revised the regulations governing the 

initial, subsequent, and exit counseling 

requirements in § 686.32(a), (b), and (c), 

respectively, and the new conversion 

counseling requirements in § 686.32(e) 

by adding for each type of counseling a 

requirement that the counseling explain 

the terms and conditions under which 

a grant recipient who voluntarily 

requested conversion of a TEACH Grant 

to a loan under § 686.43(a)(1)(i) may 

subsequently request and be approved 

for a reversal of the conversion, as 

described above. We have also added 

new paragraph § 686.12(b)(7) to provide 

that the contents of the agreement to 

serve or repay must include this same 

information. 

We believe that the expanded 

counseling reflected in these regulations 

will help reduce the number of grants 

that are converted to loans. We note, 

however, that, consistent with the rules 

relating to the Direct Loan Program, a 

recipient’s failure to receive or read the 

counseling materials is not a basis for 

reconverting the loan to a grant. 

The proposed regulations describing 

the initial, subsequent, exit, and 

conversion counseling included 

language stating that the counseling 

must explain that a TEACH Grant that 

has been converted to a Direct 

Unsubsidized Loan may be reconverted 

to a grant if the Secretary determines 

that the grant was converted to a loan 

in error. For consistency with 

redesignated § 686.43(a)(5), we have 

revised this language to state that a grant 

that was converted to a loan may also 

be reconverted to a grant based on 

documentation showing that the 

recipient was satisfying the service 

obligation within the required time 

frame. 

We have deleted § 686.43(d), which 

stated that a TEACH Grant that is 

converted to a Federal Direct 

Unsubsidized Loan cannot be 

reconverted to a grant, consistent with 

the other changes to this section. 

Comments: A couple of commenters 

recommended that all types of TEACH 

Grant counseling should provide grant 

recipients with information about the 

options of income-driven repayment 

plans and public service loan 

forgiveness for those whose TEACH 

Grants are converted to loans. 

Discussion: In the NPRM, we 

proposed to provide information about 

income-driven repayment plans and 

public service loan forgiveness in the 

new conversion counseling for 

recipients whose grants are converted to 

loans. We do not believe it is necessary 

to include this information in initial, 

subsequent, or exit counseling, since the 

information is relevant only to 

recipients whose grants are being 

converted to loans. 

Changes: None. 

Documenting the Service Obligation 

(§ 686.40) 

Comments: A couple of commenters 

expressed concern about removing the 

requirement for grant recipients to 

confirm their status within 120 days of 

ceasing enrollment in a program for 

which they received a TEACH Grant. 

The commenters felt that by removing 

the requirement for initial certification, 

grant recipients would lose track of the 

requirement to certify their progress 

toward satisfying the service obligation 

in subsequent years, despite seeking to 

obtain, or even working, in qualifying 

employment. Other commenters 

supported the proposed changes that 

were intended to simplify the 

procedures for grant recipients to certify 

that they are meeting the required 

service obligation, and the provisions 

for the Secretary to provide periodic 

notifications to grant recipients 

reminding them of their service 

obligation requirements. 

Discussion: We continue to believe 

that the current 120-day certification 

requirement should be removed because 

it adds unnecessary complexity to the 

requirements for documenting the 

service obligation. That complexity 

may, in some cases, have resulted in 

grant recipients who were otherwise 

meeting the service obligation 

requirements having their grants 

converted to loans. Under § 686.42(a)(2), 

at least annually during the service 

obligation period the Secretary will 

provide the grant recipient with 

information that includes the number of 

years of qualifying teaching that the 

recipient has completed and the 

remaining timeframe within which the 

grant recipient must complete the 

service obligation. We believe that these 

notifications will provide the 

information the grant recipient needs to 

stay on track to fulfill the service 

obligation. 

Changes: None. 

Periods of Suspension (§ 686.41) 

Comments: A couple of commenters 

noted that there may be life 

circumstances that reasonably prohibit 

grant recipients from securing 

employment in eligible schools. 

Discussion: While we appreciate the 

commenters’ concern, it would be 

difficult for the Department to 

determine all the life circumstances that 

might reasonably prohibit grant 

recipients from securing employment in 

eligible schools, and any such 

determination could be considered 

arbitrary. We note that, under new 

§ 686.41(d), the Secretary may provide 

temporary suspensions of the period for 

completing the service obligation on a 

case-by-case basis if the Secretary 

determines that a grant recipient was 

unable to complete a full academic year 

of teaching or begin the next academic 

year of teaching due to exceptional 

circumstances significantly affecting the 

operation of the school or educational 

service agency where the grant recipient 

was employed or the grant recipient’s 

ability to teach. 

Changes: None. 

Obligation To Repay the Grant 

(§ 686.43) 

Comments: None. 

Discussion: After further review of the 

NPRM, the Department recognizes that 

there was substantial overlap between 

proposed § 686.43(a)(5) and 

§ 686.43(a)(6) and that the latter section 

was not clear. Specifically, paragraph 

(a)(6) provided for reconversion of a 

grant that had been ‘‘involuntarily’’ 

converted (that is, a grant that had been 

converted for a reason other than a 

voluntary request for conversion from 

the grant recipient, which would 

include the circumstances described in 

paragraph (a)(5)), and it also provided 

for reconversion of a grant that had been 

‘‘improperly’’ converted to a loan (that 

is, a grant that had been converted in 

error), based on documentation 

provided by the recipient or in the 

Department’s records demonstrating 

that the recipient was satisfying the 

service obligation, or that the grant had 

been converted to a loan in error. The 


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Department has revised these sections to 

clarify the requirements. 

Changes: The Department has 

removed proposed § 686.43(a)(5), 

redesignated paragraph (a)(6) as (a)(5), 

revised redesignated paragraph (a)(5) for 

greater clarity, and renumbered the 

remaining paragraphs in § 686.43(a). 

Comments: Some commenters felt 

that, to strengthen the effectiveness of 

provisions regarding incorrect grant-toloan conversions, the Department 

should automatically provide any 

recipient with a written ‘‘statement of 

error’’ when a grant that was incorrectly 

converted is reconverted to a TEACH 

Grant. Under the proposed regulations, 

this statement of error would have been 

provided at the recipient’s request. 

Discussion: We agree with the 

commenters. Automatically providing 

the grant recipient with a written 

statement confirming that the TEACH 

Grant had been converted to a loan in 

error when the loan is reconverted to a 

TEACH grant would ensure that the 

grant recipient has documentation that 

the Department determined that the 

conversion was incorrect without 

further inconveniencing the affected 

individual. 

Changes: Proposed § 686.43(a)(7)(iv), 

which stated that a statement of error 

would be provided to a grant recipient 

at the recipient’s request, has been 

redesignated as § 686.43(a)(6)(vi) and 

revised to provide that the Secretary 

will automatically send a statement of 

error to the recipient when a TEACH 

Grant that was converted to a loan in 

error is reconverted to a TEACH Grant. 

Comments: Some commenters 

believed that there should be a 

formalized process for a TEACH Grant 

recipient to request reconsideration of 

other adverse actions that impact the 

recipient’s ability to complete the 

service obligation, stating that grant 

recipients should have the opportunity 

to request reconsideration by the 

Secretary of any adverse action taken 

against them by the Secretary in 

connection with the servicing of their 

grant. Such adverse actions would 

include, but would not be limited to, the 

rejection of a certification of teaching 

service, a determination that the 

recipient’s employment does not meet 

the service obligation requirements, or a 

denial of a request for suspension or 

discharge. The commenters 

recommended that if the Secretary 

determines that the adverse action was 

taken in error, the Secretary should 

reverse the adverse action and take all 

other actions necessary to correct the 

adverse action. The commenters 

believed that implementing this type of 

process would likely result in fewer 

erroneous grant-to-loan conversions 

resulting from wrongfully rejected 

certifications or other types of erroneous 

actions. 

Discussion: We are not aware of 

widespread problems involving 

‘‘wrongful’’ rejections of certifications or 

other erroneous actions such as those 

cited by the commenters. The 

Department rejects a certification form 

or a suspension/discharge request if 

information needed to confirm the 

qualifying service or approve the 

suspension/discharge is missing, or if 

the information provided on the 

certification or the suspension/ 

discharge request does not confirm 

qualifying service or establish eligibility 

for the suspension/discharge (e.g., if the 

dates of teaching are missing or 

incomplete, or if the school listed on the 

certification form is not listed in the 

Teacher Cancellation Low Income 

Directory). These situations are 

generally resolved by the recipient 

providing the missing or additional 

information. If information is missing, a 

letter is sent to the recipient explaining 

what information the recipient needs to 

submit so the certification or request 

can be processed. If the information 

provided does not confirm that the 

individual has performed qualifying 

service or does not support the 

recipient’s eligibility for suspension/ 

discharge, the recipient receives a letter 

explaining the reason for the rejection 

and has an opportunity to provide 

information documenting the qualifying 

service or suspension/discharge 

eligibility. In addition, if recipients 

continue to disagree with the decision, 

they may contact the Department’s 

Federal Student Aid Ombudsman’s 

office to try to resolve the issue. Thus, 

we do not believe it is necessary to 

establish a formalized process for grant 

recipients to request reconsideration of 

actions such as rejections of certification 

forms or denials of suspension or 

discharge requests. Processes are 

already in place for recipients to be 

notified of any problems with a 

certification form or suspension/ 

discharge request, and to provide an 

opportunity for the recipient to submit 

corrected or missing information. We 

further note that the simplified 

requirements for documenting the 

service obligation in these final 

regulations should significantly reduce 

the number of grant-to-loan conversions. 

Changes: None. 

Directed Questions 

Comments: In response to the directed 

questions that were included in the 

NPRM, a commenter supported the 

suggestion that a student’s service 

obligation period be extended by the 

number of years their TEACH grants 

were incorrectly in loan status, 

regardless of whether the student 

completed one or more years of 

qualifying service during the period 

during which the grant was treated as a 

loan as described in the first directed 

question, or did not complete any 

qualifying service during the erroneous 

conversion period as described in the 

second directed question. The 

commenter felt that, in either scenario, 

the TEACH recipient may have left 

qualifying service at some point after 

the grant-to-loan conversion. The 

commenter further stated that reentering qualifying service is not a 

simple undertaking, noting that grant 

recipients may have relocated to an area 

without qualifying service positions or 

made other life choices that would 

hinder their ability to immediately reenter a qualifying position. The 

commenter felt that extending the 

timeframe for completing the service 

obligation would give these individuals 

sufficient time to find qualifying 

positions to establish their eligibility for 

TEACH grants with minimal disruption 

to their lives and would mitigate the 

harm they have already suffered from 

the erroneous grant-to-loan conversion. 

Discussion: We agree with the 

commenter that the eight-year service 

obligation period should not include the 

period of time that the TEACH Grant 

was incorrectly in loan status, and that 

individuals whose grants were 

converted to loans in error may have 

stopped teaching because they believed 

that they would no longer receive credit 

for their service or for other reasons, and 

that after the erroneous conversion has 

been corrected it may take a significant 

period of time for these recipients to 

find qualifying teaching positions. 

However, because it provides more time 

for a recipient to find qualifying 

employment and to complete the 

teaching service obligation, we believe it 

would be more appropriate to adopt the 

alternative approach described in the 

directed question scenarios. That is, 

after the correction of the erroneous 

conversion we would provide the grant 

recipient with an additional period of 

time, equal to eight years minus the 

number of full academic years of 

qualifying teaching that the recipient 

had completed prior to the reconversion 

of the recipient’s loan to a TEACH Grant 

(including any years of qualifying 

teaching that the recipient completed 

during the period when the grant was 

incorrectly in loan status), to complete 

the remaining portion of the service 


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obligation. This approach is illustrated 

by Example 1 below. 

Example 1 

• A grant recipient completes the 

program for which he or she received a 

TEACH Grant and enters the service 

obligation period. 

• The recipient receives no 

suspensions and does not begin 

qualifying teaching until the start of the 

fifth year of the eight-year service 

obligation period. 

• The recipient completes two 

academic years of qualifying teaching 

during the fifth and sixth years of the 

eight-year service obligation period. At 

the beginning of the seventh year of the 

service obligation period, the recipient’s 

TEACH Grant is converted to a loan in 

error and remains incorrectly in loan 

status for three years. 

• During the period when the grant is 

incorrectly in loan status, the recipient 

completes one additional academic year 

of qualifying teaching service. 

• After the erroneous conversion is 

reversed and the recipient’s loan is 

reconverted to a TEACH Grant, the three 

years of completed service (including 

the year of teaching completed while 

the grant was incorrectly in loan status) 

is subtracted from eight years, giving the 

recipient an additional five years 

following the correction of the 

erroneous conversion to complete the 

remaining one year of teaching required 

under the service obligation. 

In contrast to the approach described 

in the directed question and illustrated 

by the above example, under the 

proposed regulations the grant recipient 

in Example 1 would have had only two 

years following the correction of the 

erroneous conversion to complete the 

remaining one year of the service 

obligation. 

Changes: We have redesignated 

proposed § 686.43(a)(7) as § 686.43(a)(6), 

and now address this issue in 

§ 686.43(a)(6)(ii) and (iii), which 

provide that after the Secretary 

reconverts an incorrectly converted loan 

to a TEACH Grant, the Secretary (1) 

applies any full academic years of 

qualifying teaching that the recipient 

completed during the period when the 

grant was incorrectly in loan status 

toward the grant recipient’s four-year 

service obligation requirement, and (2) 

provides the recipient with an 

additional period of time to complete 

the remaining portion of the service 

obligation equal to eight years, minus 

the number of full academic years of 

qualifying teaching that the recipient 

completed prior to the correction of the 

erroneous conversion. 

Executive Orders 12866, 13563, and 

13771 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Office of Management and Budget 

(OMB) must determine whether this 

regulatory action is ‘‘significant’’ and, 

therefore, subject to the requirements of 

the Executive order and subject to 

review by OMB. Section 3(f) of 

Executive Order 12866 defines a 

‘‘significant regulatory action’’ as an 

action likely to result in a rule that 

may— 

(1) Have an annual effect on the 

economy of $100 million or more, or 

adversely affect a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or Tribal governments or 

communities in a material way (also 

referred to as an ‘‘economically 

significant’’ rule); 

(2) Create serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; 

(3) Materially alter the budgetary 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or 

(4) Raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

stated in the Executive order. 

Under Executive Order 12866, section 

3(f)(1), the changes proposed in this 

regulatory action would materially alter 

the rights and obligations of recipients 

of Federal financial assistance under 

title IV of the HEA. Therefore, OMB has 

determined that this is a significant 

regulatory action subject to review by 

OMB. 

Under Executive Order 13771, for 

each new regulation that the 

Department proposes for notice and 

comment or otherwise promulgates that 

is a significant regulatory action under 

Executive Order 12866 and that imposes 

total costs greater than zero, it must 

identify two deregulatory actions. For 

FY 2020, any new incremental costs 

associated with a new regulation must 

be fully offset by the elimination of 

existing costs through deregulatory 

actions. The final regulations are a 

significant regulatory action under 

Executive Order 12866. However, 

Executive Order 13771 does not apply 

to ‘‘transfer rules’’ that cause only 

income transfers between taxpayers and 

program beneficiaries. Because the 

portion of the regulatory changes 

relating to the TEACH Grant Program 

and PSLF are a transfer rule and the 

remaining proposed regulatory changes 

impose minimal estimated costs of 

approximately $1.27 million in 

annualized net PRA costs at a 7 percent 

discount rate, discounted to a 2016 

equivalent, over a perpetual time 

horizon, the requirement to offset new 

regulations in Executive Order 13771 

does not apply to this final regulation. 

Accordingly, the Department is not 

required to identify deregulatory actions 

under Executive Order 13771. 

We have also reviewed these final 

regulations under Executive Order 

13563, which supplements and 

explicitly reaffirms the principles, 

structures, and definitions governing 

regulatory review established in 

Executive Order 12866. To the extent 

permitted by law, Executive Order 

13563 requires that an agency— 

(1) Propose or adopt regulations only 

on a reasoned determination that their 

benefits justify their costs (recognizing 

that some benefits and costs are difficult 

to quantify); 

(2) Tailor its regulations to impose the 

least burden on society, consistent with 

obtaining regulatory objectives and 

taking into account—among other things 

and to the extent practicable—the costs 

of cumulative regulations; 

(3) In choosing among alternative 

regulatory approaches, select those 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety, 

and other advantages; distributive 

impacts; and equity); 

(4) To the extent feasible, specify 

performance objectives, rather than the 

behavior or manner of compliance a 

regulated entity must adopt; and 

(5) Identify and assess available 

alternatives to direct regulation, 

including economic incentives—such as 

user fees or marketable permits—to 

encourage the desired behavior, or 

provide information that enables the 

public to make choices. 

Executive Order 13563 also requires 

an agency ‘‘to use the best available 

techniques to quantify anticipated 

present and future benefits and costs as 

accurately as possible.’’ The Office of 

Information and Regulatory Affairs of 

OMB has emphasized that these 

techniques may include ‘‘identifying 

changing future compliance costs that 

might result from technological 

innovation or anticipated behavioral 

changes.’’ 

We are issuing these final regulations 

only on a reasoned determination that 

their benefits justify their costs. Based 

on the analysis that follows, the 

Department believes that these 

regulations are consistent with the 

principles in Executive Order 13563. 

We also have determined that this 

regulatory action does not unduly 

interfere with State, local, or Tribal 


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49812 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

12Section 420N(b)(1)(C) of the HEA describes 

high-need fields as mathematics, science, foreign 

languages, bilingual education, special education, 

reading specialist, or another field documented as 

high-need by the Federal Government, State 

government, or LEA, and approved by the 

Secretary. 

13 Government Accountability Office. (2015). 

Higher Education: Better Management of Federal 

Grant and Loan Forgiveness Programs for Teachers 

Needed to Improve Participant Outcomes (GAO 15– 

314). Washington, DC: United States Government 

Accountability Office. 

14U.S. Department of Education. (2018). Study of 

the Teacher Education Assistance for College and 

Higher Education (TEACH) Program. Respondents 

could select more than one option. 

governments in the exercise of their 

governmental functions. 

In this regulatory impact analysis, we 

discuss the need for regulatory action, 

the potential costs and benefits, 

assumptions, limitations, and data 

sources, as well as regulatory 

alternatives we considered. 

Need for Regulatory Action 

In 2007, Congress established the 

Teacher Education Assistance for 

College and Higher Education (TEACH) 

Grant Program to increase the number of 

teachers in high-need fields in lowincome schools. In exchange for 

receiving a TEACH Grant, recipients 

agree to teach in a high-need field 12

such as reading, mathematics, or 

science, at a low-income school for at 

least four years in an eight-year period 

and annually certify that they intend to 

meet this requirement. If a recipient 

does not meet the grant requirements or 

the annual certification requirements, 

the grant converts to a Federal Direct 

Unsubsidized Loan with interest 

charged from the date of each TEACH 

Grant disbursement. 

A 2015 Government Accountability 

Office (GAO) report found that around 

36,000 out of more than 112,000 TEACH 

Grant recipients had not fulfilled 

TEACH Grant requirements and had 

their grants converted to loans (GAO, 

2015).13 GAO concluded that the 

Department needs to explore ways to 

increase awareness among students of 

how the TEACH Grant program operates 

and improve program management, 

especially with respect to the grant-toloan conversion dispute process. GAO 

further noted that the Department 

should take steps to understand why 

teachers often do not meet the TEACH 

program requirements. GAO reiterated 

that the goal of reducing grant-to-loan 

conversions and increasing program 

completion should help drive the 

Department’s efforts. GAO cited 

inconsistent and confusing external 

guidance regarding grant to loan 

conversions and the dispute process 

available to recipients as a failure of 

‘‘Federal internal control standards that 

highlight effective external 

communication.’’ The revised 

regulations help to address GAO’s 

concerns by improving the 

administration of the program and 

providing clearer information to 

recipients earlier in their service to 

prevent future problems, and more 

thoroughly explaining the dispute 

process if issues do arise. 

A 2018 study conducted for the 

Department by the American Institutes 

for Research (U.S. Department of 

Education, 2018) 14 found that as of June 

2016, 63 percent of TEACH Grant 

recipients who started their eight-year 

service obligation period before July 

2014 had their grants converted to 

Unsubsidized Loans because they did 

not meet the service obligation 

requirements or the annual certification 

requirements. For instance, the study 

reported that 39 percent of recipients 

who were in loan status cited teaching 

in a position that did not qualify for 

TEACH Grant service and 33 percent 

cited not working as a certified teacher. 

Thirty-two percent said they did not 

understand the service requirements. 

Other factors related to teachers having 

grants converted to loans included not 

knowing about annual certification (19 

percent), challenges related to the 

certification process (13 percent), 

forgetting about annual certification (9 

percent) and other factors made up 24 

percent, such as recipients who were 

never certain of their intention to teach 

or who changed their employment to a 

nonteaching position prior to meeting 

their service obligation. 

To address the concerns raised by 

these studies, we are changing the 

regulations to facilitate the process of 

documenting satisfaction of the service 

obligation requirements and ensure that 

recipients who fulfill their service 

obligation receive credit for it. 

Additionally, these regulations create a 

process to remediate conversions caused 

by life events (including on a case-bycase basis as determined by the 

Secretary) or administrative error to 

facilitate the completion of service 

obligation requirements for those who 

seek to do so. This will help reduce the 

percentage of TEACH Grants that 

erroneously convert to Direct 

Unsubsidized Loans and fulfill the 

TEACH Grant Program’s intended 

outcomes. 

The regulations also ensure that faithbased entities, students who are 

members of religious orders, and 

borrowers fulfilling service obligations 

are not further burdened by their 

religious beliefs, and instead have equal 

access to broadly available programs 

and government funding. In response to 

the Supreme Court’s decision in Trinity 

Lutheran and Executive Order 13798 

(U.S. Attorney General Memorandum on 

Federal Law Protections for Religious 

Liberty (October 6, 2017)), the 

Department engaged in a full review of 

its regulations related to title IV, HEA 

programs in order to identify provisions 

that may discriminate against otherwise 

eligible students and faith-based entities 

by disqualifying them from title IV, HEA 

programs due to their religious beliefs in 

violation of the Free Exercise Clause of 

the First Amendment to the United 

States Constitution (Free Exercise 

Clause). The Department proposes to 

make changes to regulatory provisions 

that may discriminate against students 

or faith-based entities as a result of their 

religious beliefs to ensure compliance 

with the Free Exercise Clause. 

Discussion of Costs, Benefits and 

Transfers 

The Department has analyzed the 

costs and benefits of complying with 

these final regulations and our estimates 

are a function of the uncertainty and 

limitations of relevant data. As 

discussed below, we believe that these 

final regulations will result in modest 

transfers from the Federal government 

and will benefit recipients of support 

under the affected programs. 

Benefits of the Final Regulations 

With respect to the TEACH Grant 

Program, we anticipate that by 

simplifying and clarifying certification 

procedures and providing greater 

flexibility to recipients to meet their 

service obligation, the final regulations 

will result in a decrease in the number 

of TEACH Grant recipients that have 

their grants converted to loans. We 

further anticipate that this outcome and 

the expansion of opportunities that 

students can use to fulfill the service 

obligation will result in more teachers 

teaching in high-need fields at lowincome schools as well as in authorized 

teacher shortage areas. 

The final regulations related to other 

programs will also reduce the potential 

for discrimination against students and 

faith-based institutions due to their 

religious beliefs in violation of the Free 

Exercise Clause. 

Net Budget Impacts 

Regarding changes to the TEACH 

Grant Program, the changes improve the 

reporting and documentation process 

for grant recipients and could lead to a 

reduction in the number of grant-to-loan 

conversions. According to Department 


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15https://tsa.ed.gov/#/reports. 

16U.S. Department of Education, National Center 

for Education Statistics, Digest of Education 

Statistics 2017, Table 209.30. Highest degree 

earned, years of full-time teaching experience, and 

average class size for teachers in public elementary 

and secondary schools, by state: 2011–12. Data not 

reported for 5 states, including the District of 

Columbia, so percentage is adjusted to be total of 

those reporting. 

data, the percentage of TEACH Grant 

recipients demonstrating effort to fulfill 

their service requirement by performing 

one or more years of qualified teaching 

service after six or more years following 

their last TEACH award has been 

increasing steadily. The improvements 

to the process for recipients to 

document their teaching service 

included in these final regulations will 

help prevent or resolve unintended 

grant to loan conversions. 

For FY 2020, The Department 

estimates that approximately 32,000 

recipients will receive $92 million in 

TEACH Grants with an average award of 

slightly over $3,000. Over the past five 

years from fiscal year 2014 through 

fiscal year 2019, the Department has 

provided a total of $524.6 million in 

TEACH grant funding to 190,686 

students. Based on program data 

through FY 2019, the Department 

estimates that 64 percent of students 

receiving TEACH Grants will fail to 

complete their required service 

commitment and will have their grants 

converted to Direct Unsubsidized 

Stafford Loans. 

Using a sensitivity analysis of grantto-loan conversions, we estimate that for 

the 2020 cohort, a one percentage point 

reduction in the grant-to-loan 

conversion would result in a transfer 

from the Federal Government of 

$727,034, since each grant that is not 

converted to a loan where the student is 

obligated to pay it back remains a grant. 

The Department recognizes that the 

percentage change that the final 

regulations would have on the 

percentage of conversions is uncertain. 

The Department intends that these 

regulatory changes will reduce the loan 

conversion rate. However, students fail 

to meet the TEACH Grant service 

requirements for many reasons, 

including teaching in positions that do 

not qualify or changing to non-teaching 

employment. For instance, the PPSS/ 

AIR study cited earlier reported that 

approximately 39 percent of TEACH 

recipients whose grants had been 

converted to loans reported teaching in 

a position that did not qualify for the 

TEACH program, 33 percent reported 

not teaching or not completing the 

teaching certificate program, 32 percent 

stated they did not understand the 

service requirements, and about 44 

percent of respondents reported factors 

related to the annual certification 

process as influencing them to not 

complete the program requirements. 

Since respondents could select more 

than one response category, the total 

percentage does not add to 100 percent. 

Of those that indicated the annual 

certification process was a problem, the 

distribution revealed that about 19 

percent said they did not know about 

the annual certification process; 13 

percent reported not certifying because 

of challenges to the certification 

process; 9 percent reported not 

certifying because they forgot, and about 

2 percent listed other reasons. 

While predicting how recipients 

might change their behavior due to the 

final regulations is speculative, the 

PPSS/AIR responses give us reason to 

assume that there will be improvement 

based on the recipients who cited the 

certification process as a factor in their 

conversion. Such improvement would 

logically lead to some reduction in the 

grant-to-loan conversion rate. 

Given an estimated grant-to-loan 

conversion rate, it is possible to identify 

a series of transfers for a series of 

percentage reductions that give context 

to the potential impact that the 

proposed regulations would have. 

FIVE PERCENTAGE POINT INTERVAL

GRANT-TO-LOAN CONVERSION IMPACTS

Percentage point reduction (%) Cost 

($millions) 

5 ................................................ 3.6 

10 .............................................. 7.3 

15 .............................................. 10.9 

20 .............................................. 14.6 

25 .............................................. 18.2 

The above table suggests that if the 

grant-to-loan conversion rate were 

reduced from the estimated 64 percent 

to 59 percent—a five percentage point 

reduction—the Federal Government 

would incur additional transfers of 

approximately $3.6 million based on the 

2020 cohort. And, if the projected 64 

percent rate were reduced by 10 

percentage points to 54 percent for the 

same 2020 cohort, there would be a cost 

of about $7.3 million. However, this 

transfer from the Federal Government 

would also result in a benefit to student 

TEACH Grant recipients who would not 

have to repay their TEACH Grants 

which would not be converted to loans. 

Note that these are five percentage 

percentage-point intervals, and not 

percentage decreases of the current rate. 

Currently, a TEACH Grant recipient 

may not satisfy the service obligation by 

teaching in a geographic region of a 

State that has been designated in the 

Nationwide List (at https://tsa.ed.gov) as 

having a shortage of teachers, or by 

teaching at a particular grade level not 

associated with a high-need field that 

has been designated in the Nationwide 

List as having a shortage of teachers. 

Instead, the recipient must teach in a 

high-need field listed in the Nationwide 

List. 

The final regulations remove this 

limitation. For example, under the final 

regulations, a grant recipient could 

satisfy the service obligation by serving 

as a full-time highly qualified general 

elementary school or secondary school 

teacher at a low-income school in a 

State that has reported a general 

shortage of elementary or secondary 

teachers in the Nationwide List. This is 

not currently allowed. Therefore, the 

final regulations allow grant recipients 

who are unable to find qualifying 

teaching jobs in a high-need field to 

meet the service obligation by teaching 

at a low-income school located in a 

geographic teacher shortage area or at a 

grade level where there is a shortage of 

teachers. This could facilitate increased 

opportunities for TEACH recipients 

toward meeting the service obligation 

and perhaps impact the conversion rate 

to loans. More importantly, it could 

serve as an important incentive to 

attract highly qualified teachers to serve 

in higher need areas and fields. It would 

be speculative to assume any specific 

amount of change in the conversion rate 

attributable to potential expanded 

teaching opportunities. Also, the 

proposed change might result in some 

grant recipients simply transferring from 

one low-income school to another lowincome school to accept a teaching 

position that might previously have not 

been eligible. 

Based on available data from the 

Department’s Teacher Shortage Area 

listing,15 there are about 10 States, 

including California, Idaho, Illinois, 

Maine, Michigan, North Dakota, South 

Dakota, Pennsylvania, Virginia, West 

Virginia, and the District of Columbia, 

that appear to have teacher shortages, 

particularly in the elementary education 

area, that could potentially expand the 

eligible teaching opportunities for 

TEACH Grant recipients. According to 

National Center for Education Statistics 

data, these States represented 

approximately 27 percent of teachers in 

public elementary and secondary 

schools in the 2011–12 Schools and 

Staffing Survey data, both for overall 

teachers and for those in their first 10 

years of teaching.16 As indicated in the 

PPSS/AIR responses, approximately 15 


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49814 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

17United States Department of Education, 

National Center for Education Statistics, Condition 

of Education—Characteristics of Traditional Public 

Schools and Charter Schools, Figure 3. Percentage 

of traditional public schools and public charter 

schools, by percentage of students eligible for free 

or reduced-price lunch: School year 2016–17. 

Available at https://nces.ed.gov/programs/coe/ 

indicator_cla.asp. 

18Annuario Pontificio 2013 (Libreria Editrice 

Vaticana 2013 ISBN 978–88–209–9070–1), p. 1422. 

percent of those respondents whose 

grants converted to loans said they were 

unable to find a job in a high-need field 

and, adjusting for the nationwide 

percentage of public schools with 30 

percent or more of students receiving a 

free and reduced lunch of 

approximately 70 percent,17 we estimate 

that the changes removing the high 

needs field requirement in qualifying 

States will reduce the overall grant-toloan conversion rate by approximately 3 

percent, so relieving that requirement 

for those States would have some net 

budget impact. Nevertheless, while the 

changes expand options for grant 

recipients to meet the service obligation 

by allowing grant recipients who are not 

teaching in a high-need subject area to 

qualify by teaching at a low-income 

school in a geographic shortage area or 

in a grade-level shortage area, we do not 

believe the final regulations would lead 

to a significant increase in the actual 

number of TEACH grant recipients. 

Overall, the final regulations have the 

potential to improve some aspects of the 

certification process and opportunities 

for recipients to meet their service 

requirements, which would benefit 

recipients, in keeping with the original 

goal of the program. As several 

provisions are expected to decrease the 

grant-to-loan conversion rate and result 

in additional cost to the Federal 

Government, we have estimated a net 

budget impact of that change. 

In addition to the 3 percent decrease 

attributed to the changes to the high 

needs field requirements, we assume 

that the additional changes to the 

TEACH Grant program described in this 

preamble will decrease grant-to-loan 

conversions. We expect this effect will 

be lower for existing cohorts as 

improved counseling is provided to 

future participants and participants who 

took out TEACH Grants several years 

ago may be established in jobs that may 

not qualify or may have moved on from 

the profession, possibly limiting the 

ways those with older TEACH grants 

may respond to the changes made by 

these regulations. As a result, we 

applied the decreases shown in Table 

[2] to the grant-to-loan conversion rate 

to the President’s Budget 2021 baseline. 

For past cohorts, the changes are 

applied only to future years of activity. 

TABLE 2—GRANT-TO-LOAN

CONVERSION RATE DECREASE FACTOR

Cohorts Decrease 

(%) 

2008–2012 ................................ 4 

2013–2019 ................................ 9 

2020–2029 ................................ 15 

The estimated net budget impact is a 

cost of $141.4 million, including a 

modification to existing cohorts of $16.6 

million and a cost for cohorts 2020 to 

2029 of $124.8 million. 

A number of the changes to the 

regulations relate to the eligibility of 

certain entities and recipients to 

participate in the title IV programs. The 

final regulations remove language 

prohibiting borrowers with Perkins 

loans made before July 1, 1993 and 

National Defense Student Loans (NDSL) 

made between October 1, 1980 and July 

1, 1993 from obtaining deferments 

during periods of otherwise eligible fulltime volunteer work that includes 

providing religious instruction, 

conducting religious services, 

proselytizing, or engaging in fundraising 

to support religious activities. Due to 

the small group of borrowers expected 

to benefit from these changes and the 

heavy discounting effect that would 

apply to any deferment costs on such 

old loans, we do not estimate any 

budget impact from these changes. 

The final regulations remove current 

provisions that state that a member of a 

religious order pursuing a course of 

study in an institution of higher 

education has no financial need for 

purposes of the Pell Grant Program, 

Federal Perkins Loan Program, FWSP, 

FSEOG, FFEL Program, or the Direct 

Loan Program. 

Despite this change, the additional 

eligibility for student aid for a very 

small group of participants in a given 

religious order would not, in our 

estimation, result in any additional 

significant financial aid costs to the 

government. We have little firm data on 

the number of members in religious 

orders subject to these changes who 

would actually choose to accept the 

financial aid for which they are eligible. 

For instance, the Franciscans are 

perhaps the largest and most wellknown mendicant religious order, 

which means the priests take a vow of 

poverty. According to a 2013 

reference,18 there are around 14,000 first 

order Franciscan members, including 

9,700 priests. Even considering other 

orders within the Franciscans and 

additional smaller monastic sects such 

as the Benedictines and Dominicans, the 

membership estimates would not be 

large. Thus, the Department believes 

that the pool of members potentially 

impacted by this regulatory change is 

already small to begin with and the final 

regulations are not going to induce 

changes in member practices and would 

not result in measurable financial aid 

estimates. Note that there are already 

many postsecondary institutions with a 

faith-based mission that are title IV 

eligible and are not affected by these 

final regulations. Therefore, the changes 

would allow our regulations to be 

consistent with the Supreme Court 

decision in Trinity Lutheran without 

involving a significant economic 

impact. 

The regulatory changes would also 

affect PSLF. Under the final regulations, 

certain institutions that are tax-exempt 

under section 501(c)(3) of the Internal 

Revenue Code that are religious 

organizations would be considered 

public service eligible employers for 

purposes of PSLF. The application form 

for PSLF (OMB No. 1845–0110) 

specifically states that a qualifying 

employer includes a ‘‘not-for-profit 

organization that is tax-exempt under 

Section 501(c)(3) of the Internal 

Revenue Code’’ but makes no exclusion 

for religious purposes. The current 

application makes it clear that, in 

performing job duties toward the fulltime requirement, a borrower’s 

qualifying employment at a 501(c)(3) 

organization or a not-for-profit 

organization does not include time 

spent participating in religious 

instruction, worship services, or any 

form of proselytizing. This provision is 

changed in the final regulations in 

response to concerns that such 

provisions would violate RFRA. There 

is little to no existing data within the 

Department to isolate the potential 

population that may be newly eligible 

after this changed rule. The 

Department’s assumption under the 

NPRM was that eligible 501(c)(3) 

employers and workers would cooperate 

in the structure of their work 

responsibilities to allow all potentially 

eligible workers not engaging in 

exclusively religious activity to meet the 

existing qualification requirements. 

However, there may have been 

previously ineligible workers, primarily 

clergy, who will be eligible under the 

changed rule. While their employers 

may have met the 501(c)(3) criteria, they 

were prohibited from receiving 

forgiveness due to the ineligibility of 

their work activities under the existing 

regulation. Based on an analysis of 

Bureau of Labor Statistics (BLS) data, 


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19U.S. Department of Education, National Center 

for Education Statistics. Integrated Postsecondary 

Education Data System 2016 Institutional 

Characteristics: Directory Information survey file 

downloaded March 3, 2018. Available at 

nces.ed.gov/ipeds/datacenter/DataFiles.aspx. 

the percentage of workers at non-profit 

religious organizations as a proportion 

of the total population of workers 

potentially eligible for Public Service 

Loan Forgiveness is very small, 

approximately 0.50% of total workers. 

This high-level potential population is 

further reduced by isolating the BLS 

occupation clergy, a proxy for our 

analysis purposes of workers engaged in 

exclusively previously ineligible 

activity at otherwise eligible 501(c)(3) 

employers. Further characteristics that 

filter this population are the percentage 

who borrow, percentage who work fulltime, and finally, the percentage who 

the Department estimates will 

successfully complete the requirements 

for PSLF, that is 120 qualifying 

payments and 10 years of service. These 

estimated adjustments to the currently 

eligible PSLF population for this newly 

eligible potential population results in a 

0.06% increase in the population 

qualifying for PSLF from the current 

baseline. Transfers in the Direct Loan 

Program for subsidy costs related to this 

potential group of newly eligible 

potential population may be as much as 

$213 million, $122 million for existing 

cohorts and $91 million for future 

cohorts. 

The changes to the GEAR UP program 

regulations would clarify that providers 

of GEAR UP services to students 

enrolled in private schools must be 

contracted independently of the private 

schools and would allow pervasively 

sectarian institutions of higher 

education to serve as fiscal agents for 

GEAR UP grants. In general, the 

Department does not estimate costs 

associated with changes to regulations 

governing competitive grant programs as 

participation in such programs is 

voluntary and funding still must be 

limited to what is appropriated by 

Congress. However, it is possible that 

certain changes in the regulatory 

framework governing a competitive 

grant program could produce transfers 

in program benefits among entities or 

recipients of services. 

Regarding the provision requiring 

providers of services to students 

enrolled in private schools to be 

independent of the school, the 

Department first assessed the extent to 

which GEAR UP services are currently 

provided to students enrolled in such 

schools. During the most recent 

reporting period, GEAR UP grantees 

reported serving students in 4,033 

schools. Of those schools, the 

Department was able to identify only 

five private schools in which students 

received GEAR UP services. In total, 

private schools represented only 0.1 

percent of schools served by the 

program and, even among the grantees 

serving such schools, private schools 

represented 0.9 percent of the total 

schools they served. As such, we do not 

believe that the requirement relating to 

the employment relationship between 

individuals providing services in such 

schools and the schools themselves is 

likely to have a large impact on the 

administration of the program. 

Regarding who may serve as a fiscal 

agent for a GEAR UP Grant, as noted 

above, the final regulations would allow 

pervasively sectarian institutions of 

higher education to serve in such a 

capacity. However, nothing in the 

current GEAR UP regulations precludes 

a pervasively sectarian institution of 

higher education from being a member 

of a GEAR UP partnership. As such, 

pervasively sectarian institutions can 

currently participate in and provide 

services under a GEAR UP grant. The 

Department does not have readily 

available data to identify all members of 

GEAR UP partnerships and whether 

they are pervasively sectarian. With 

such information, the Department could 

more easily quantify the potential 

number of partnerships affected by the 

change. However, even without such 

information, given that pervasively 

sectarian institutions are already eligible 

members of partnerships, we do not 

believe the change to allow them to 

serve as fiscal agents would 

dramatically change the makeup of the 

GEAR UP applicant pool. Any 

pervasively sectarian institution that 

currently wishes to participate in the 

GEAR UP program may do so and this 

change would only result in a shift in 

who has primary fiscal liability for the 

grant. 

Alternatives Considered 

With respect to the TEACH Grant 

program, we considered maintaining the 

current regulations as is, that is not 

including provisions related to the 

current reconsideration process in the 

final regulations, maintaining the 

current counseling requirements 

without adding a separate conversion 

counseling requirement, maintaining, 

instead of expanding, the current 

regulations related to qualifying teacher 

shortage areas for fulfilling the service 

obligation, and not expanding allowable 

suspensions beyond those that are 

currently available. As we describe in 

previous sections, making these changes 

gives the Department the opportunity to 

address GAO concerns specifically, and 

generally provide from more 

information and clarity to recipients of 

the TEACH Grant program. 

For the faith-based provisions, we 

considered not making the changes and 

leaving the current regulatory language 

in place as written. 

Regulatory Flexibility Act Certification 

The Secretary certifies that the final 

regulations will not have a significant 

economic impact on a substantial 

number of small entities. In fact, the 

primary entities who are affected by the 

final regulations are individual 

students, not organizations, businesses, 

or governmental units. This holds true 

for the faith-based component of the 

final regulations that address 

individuals participating in religious 

orders, or student borrowers applying 

for PSLF. Similarly, the changes to the 

TEACH Grant Program regulations 

primarily affect students who are 

interested in teaching and apply for a 

TEACH grant. 

Of the entities that would be affected 

by the final regulations, many 

institutions, especially institutions with 

a faith-based mission, would be 

considered small. The Department 

recently proposed a size classification 

based on enrollment using IPEDS data 

that established the percentage of 

institutions in various higher education 

sectors considered to be small entities, 

as shown in Table [6].19 This size 

classification was described in the 

NPRM published in the Federal 

Register on July 31, 2018 for the 

proposed borrower defense rule (83 FR 

37242, 37302). Under the Department’s 

proposed size standards, ‘‘small 

entities’’ have an enrollment of 1,000 

students or less at 4-year schools or 500 

students or less at 2-years schools. The 

Department has discussed the proposed 

standard with the Chief Counsel for 

Advocacy of the Small Business 

Administration, and while no change 

has been finalized, the Department 

continues to believe this approach better 

reflects a common basis for determining 

size categories that is linked to the 

provision of educational services. 


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49816 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

TABLE 6—SMALL ENTITIES UNDER ENROLLMENT BASED DEFINITION

Level Type Small Total Percent 

2-year .............................................................. Public .............................................................. 342 1,240 28 

2-year .............................................................. Private ............................................................ 219 259 85 

2-year .............................................................. Proprietary ...................................................... 2,147 2,463 87 

4-year .............................................................. Public .............................................................. 64 759 8 

4-year .............................................................. Private ............................................................ 799 1,672 48 

4-year .............................................................. Proprietary ...................................................... 425 558 76 

Total ......................................................... ......................................................................... 3,996 6,951 57 

The final regulations would affect 

students who belong to religious orders 

and those students most likely attend 

institutions with a religious mission. In 

general, we believe faith-based 

institutions are more likely to be small 

institutions. However, the final 

regulations do not affect the title IV 

eligibility of such institutions. 

Accordingly, The Secretary certifies 

that the final regulations will not have 

a significant economic impact on a 

substantial number of small entities. 

Nothing in the final regulations would 

compel institutions, small or not, to 

engage in substantive changes to their 

programs. Therefore, there is no 

estimated associated institutional 

burden. 

Even if the affected institutions were 

considered small entities, the final 

regulations are designed to permit them 

to participate in title IV programs 

without jeopardizing their religious 

mission. Nothing in the final regulations 

would require institutions to expand 

their enrollment, take on additional 

students, or to participate in title IV aid 

programs, but the final regulations 

would give them that opportunity. 

Paperwork Reduction Act of 1995 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department provides the 

general public and Federal agencies 

with an opportunity to comment on 

proposed and continuing collections of 

information in accordance with the 

Paperwork Reduction Act of 1995 (PRA) 

(44 U.S.C. 3506(c)(2)(A)). This helps 

ensure that: The public understands the 

Department’s collection instructions, 

respondents can provide the requested 

data in the desired format, reporting 

burden (time and financial resources) is 

minimized, collection instruments are 

clearly understood, and the Department 

can properly assess the impact of 

collection requirements on respondents. 

Part 686 contains information 

collection requirements. Under the PRA 

the Department has submitted a copy of 

these sections to OMB for its review. 

A Federal agency may not conduct or 

sponsor a collection of information 

unless OMB approves the collection 

under the PRA and the corresponding 

information collection instrument 

displays a currently valid OMB control 

number. 

Notwithstanding any other provision 

of law, no person is required to comply 

with, or is subject to penalty for failure 

to comply with, a collection of 

information if the collection instrument 

does not display a currently valid OMB 

control number. 

In the final regulations we will 

display the control numbers assigned by 

OMB to any collection requirements 

adopted in the final regulations. 

Section 686.12—Agreement to serve 

or repay. 

Requirements: Under final § 686.12, 

the TEACH Grant agreement to serve or 

repay will be expanded and updated 

with revised definitions, requirements, 

and explanations of the program and 

participant conditions, and options as 

discussed in the preamble. 

Burden Calculation: These final 

regulations will require changes to the 

TEACH Grant agreement to serve form 

currently approved under OMB Control 

Number 1845–0083. We do not believe 

those changes will impact the current 

burden associated with this form. We 

estimate that, on average, it will take a 

grant recipient 30 minutes (.50 hours) to 

review and complete the updated 

agreement, which is done electronically. 

We continue to anticipate 50,793 

TEACH applicants will annually utilize 

the agreement accepting the program 

terms, including the required teaching 

service, or the conversion of the grant to 

a Direct Unsubsidized Loan if such 

service is not met or the applicant does 

not otherwise comply with the terms of 

the agreement. Based on one response 

per applicant, we continue to estimate 

an annual reporting burden for 

individuals of 25,397 hours (50,793 × 

.50 hours). 

§ 686.12—AGREEMENT TO SERVE OR REPAY

[OMB control number 1845–0083] 

Entity Respondent Responses 

Time to 

respond 

(hours) 

Burden hours 

Individual .......................................................................................................... 50,793 50,793 .50 25,397 

Total .......................................................................................................... 50,793 50,793 ........................ 25,397 

Section 686.32—Counseling 

requirements. 

Requirements: The final regulations in 

§ 686.32 will expand the information 

that is provided to TEACH Grant 

recipients during initial, subsequent, 

and exit counseling. The final 

regulations will add a new conversion 

counseling requirement for grant 

recipients whose TEACH Grants are 

converted to Direct Unsubsidized Loans. 

Burden Calculation: Currently there is 

burden of 24,459 hours assessed to 

37,749 respondents for the counseling 

requirements of § 686.32 in the 

regulatory information collection 1845– 

0084 as filed in January 2018. These 

figures do not include the new 

conversion counseling that will be 

required under the final regulations. 

The expansion and revision of the 


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required program counseling will 

require changes to the counseling 

currently available. We anticipate that 

approximately 1,520 TEACH Grant 

recipients will either voluntarily 

convert their grant to a loan or will run 

out of time to complete the teaching 

obligation and have the grant converted 

to a loan. This is based on the number 

of voluntary and out of time conversions 

noted for 2019. We do not believe there 

will be a significant increase or decrease 

in such activity. 

We believe that it will take a TEACH 

Grant recipient the same approximate 

20 minutes (.33 hours) to review the 

new conversion counseling materials as 

it takes them to review the other 

required counseling materials. We 

estimate the total burden of 502 hours 

(1,520 × .33 hours) for recipients to 

review the conversion counseling 

material. 

The changes to the initial, subsequent, 

exit, and new conversion counseling 

information collection will be 

completed and a full public clearance 

filing will be made after publication of 

the final rule and before being made 

available for use by the effective date of 

the regulations. 

§ 686.32—COUNSELING REQUIREMENTS

[OMB control number 1845–0084 new conversion counseling figures only] 

Entity Respondent Responses 

Time to 

respond 

(hours) 

Burden hours 

Individual .......................................................................................................... 1,520 1,520 .33 502 

Total .......................................................................................................... 1,520 1,520 ........................ 502 

Section 686.40—Documenting the 

service obligation. 

Requirements: The final regulations 

clarify the requirements regarding the 

documentation of completion of the 

teaching service obligation in the 

TEACH Grant Program and how it is 

reported. To support the requirement, 

we provided a draft ‘‘TEACH Grant 

Certification of Completed Teaching’’ 

form with the Notice of Proposed 

Rulemaking. While no public comments 

were received regarding the form, we 

have determined that we need to add to 

the form. We are modifying the ‘‘TEACH 

Grant Certification of Completed 

Teaching’’ form by adding an option to 

allow TEACH Grant recipients to certify 

that they have begun qualifying teaching 

service within a timeframe that will 

allow them to complete the service 

obligation within the eight year service 

obligation period, to avoid having their 

TEACH Grants converted to loans in 

accordance with Section 686.43(a)(1)(ii). 

This form continues to require both 

TEACH grant recipient and eligible 

school official information. 

Burden Calculation: The changes to 

the regulations relating to the required 

service obligation will require a new 

certification form. During the 2018 

calendar year, Department records 

indicate we received documentation for 

52,989 grantees regarding yearly service 

obligation completion. We estimate that 

to meet the requirements of § 686.40 

each respondent will need 20 minutes 

(.33 hours) to complete the certification 

form. We estimate the total burden of 

17,486 hours (52,989 × .33 hours) for 

completion of this form. 

We believe that the second 

certification option on the ‘‘TEACH 

Grant Certification of Completed 

Teaching’’ form is needed to allow 

TEACH Grant recipients who have not 

yet completed any qualifying teaching, 

but who have sufficient time remaining 

in the eight-year service obligation 

period to complete the required fouryears of teaching, to certify that they 

have begun qualifying teaching to avoid 

conversion of the TEACH Grants to 

loans under Section 686.43(a)(1)(ii). We 

estimate that to meet the certification 

requirements each respondent will need 

20 minutes (.33 hours) to complete the 

certification form. We estimate that 

approximately 24 TEACH Grant 

recipients will submit the certification 

form for this purpose. We estimate a 

total burden of 8 hours (24 × .33 hours 

= 8 hours) for completion of the form. 

We estimate the total burden of 

17,494 hours (53,013 × .33 hours) under 

OMB Control Number 1845–0158. 

§ 686.40—DOCUMENTING THE SERVICE OBLIGATION

[OMB control number 1845–0158] 

Entity Respondent Responses 

Time to 

respond 

(hours) 

Burden hours 

Individual documenting service obligation ....................................................... 52,989 52,989 .33 17,486 

Individual documenting beginning eligible teaching ........................................ 24 24 .33 8 

Total .......................................................................................................... 53,013 53,013 ........................ 17,494 

Section 686.41—Periods of 

suspension. 

Requirements: The final regulations 

add new conditions under which a 

TEACH Grant recipient may receive a 

temporary suspension of the period for 

completing the service obligation. 

Burden Calculation: The final 

regulations added new conditions that 

will allow a TEACH Grant recipient to 

receive a temporary suspension of the 

period for completing the service 

obligation. These new conditions, 

including completion of licensure 

requirements, military orders for the 

grantee’s spouse, and residing or being 

employed in a federally declared major 

disaster area require new temporary 

suspension forms. The qualifying leave 

under the Family and Medical Leave 

Act of 1993, and the call to military 

service are retained in the regulations. 

Department records indicate that, 

during the 2018 calendar year, we 

received documentation supporting 

suspension of 589 grantees for 

enrollment to complete licensure 


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requirements. We estimate that to meet 

the requirements in final 

§ 686.41(a)(1)(ii), each respondent will 

need 20 minutes (.33 hours) to complete 

the certification form. We estimate a 

total burden of 194 hours (589 × .33 

hours). 

Department records indicate that, 

during the 2018 calendar year, we 

received documentation supporting 

suspension of 334 grantees for 

qualifying leave under the Family and 

Medical Leave Act of 1993. We estimate 

that to meet the requirements in final 

§ 686.41(a)(1)(iii), each respondent will 

need 20 minutes (.33 hours) to complete 

the certification form. We estimate a 

total burden of 110 hours (334 × .33 

hours). 

Department records indicate that, 

during the 2018 calendar year, we 

received documentation supporting 

suspension of 24 grantees for call to 

military service. We estimate that to 

meet the requirements in final 

§ 686.41(a)(1)(iv), each respondent will 

need 20 minutes (.33 hours) to complete 

the certification form. We estimate a 

total burden of 8 hours (24 × .33 hours). 

We anticipate that we will receive 

documentation supporting suspension 

of 25 grantees based on military orders 

for the grantee’s spouse. We estimate 

that to meet the requirements in final 

§ 686.41(a)(1)(v), each respondent will 

need 20 minutes (.33 hours) to complete 

the certification form. We estimate a 

total burden of 8 hours (25 × .33 hours). 

We anticipate that we will receive 

documentation supporting suspension 

of 500 grantees based on residing or 

being employed in a federally declared 

major disaster area. We estimate that to 

meet the requirements in final 

§ 686.41(a)(1)(vi), each respondent will 

need 20 minutes (.33 hours) to complete 

the certification form. We estimate a 

total burden of 165 hours (500 × .33 

hours). 

We estimate the total burden of 485 

hours (1,472 × .33 hours) under OMB 

Control Number 1845–0158. 

§ 686.41—PERIODS OF SUSPENSION

[OMB control number 1845–0158] 

Entity Respondent Responses 

Time to 

respond 

(hours) 

Burden hours 

Individual (a)(1)(ii) ............................................................................................ 589 589 .33 194 

Individual (a)(1)(iii) ........................................................................................... 334 334 .33 110 

Individual (a)(1)(iv) ........................................................................................... 24 24 .33 8 

Individual (a)(1)(v) ............................................................................................ 25 25 .33 8 

Individual (a)(1)(vi) ........................................................................................... 500 500 .33 165

Total .......................................................................................................... 1,472 1,472 ........................ 485 

Section 686.42—Discharge of 

agreement to serve or repay. 

Requirements: The final regulations 

revise the conditions under which a 

TEACH Grant recipient may discharge 

an agreement to serve or repay based on 

military service. 

Burden Calculation: Department 

records indicate that, during the 2018 

calendar year, we received 

documentation supporting suspension 

of 10 grantees for discharge due to an 

extended call to military service. We 

estimate that to meet the requirements 

in final § 686.42(c), each respondent 

will need 20 minutes (.33 hours) to 

complete the new certification form also 

used for military service suspension. 

We estimate a total burden of 3 hours 

(10 × .33 hours) under OMB Control 

Number 1845–0158. 

§ 686.42—DISCHARGE OF AGREEMENT TO SERVE OR REPAY

[OMB control number 1845–0158] 

Entity Respondent Responses 

Time to 

respond 

(hours) 

Burden hours 

Individual .......................................................................................................... 10 10 .33 3

Total .......................................................................................................... 10 10 ........................ 3 

Section 686.43—Obligation to repay 

the grant. 

Requirements: The final regulations 

simplify the rules governing when a 

TEACH Grant will be converted to a 

Direct Unsubsidized Loan and provide 

for annual notifications from the 

Secretary to the recipient regarding the 

status of a recipient’s TEACH Grant 

service obligation. Under the final 

regulations, a TEACH Grant recipient 

can request conversion of the grant to a 

loan if the recipient decides not to fulfill 

the TEACH Grant obligations for any 

reason or if the recipient fails to begin 

or maintain qualifying teaching service 

within a timeframe that would allow the 

recipient to complete the service 

obligation in the requisite eight-year 

period. Additionally, the final 

regulations describe the notifications 

the Secretary will annually send to all 

TEACH Grant recipients regarding the 

service obligation requirements. 

Burden Calculation: We believe that 

the final regulations will require action 

on the part of TEACH grant recipients. 

Based on Department data, during the 

2018 calendar year there were 52,989 

TEACH Grant recipients who submitted 

evidence of completed teaching service. 

We estimate that an additional 25 

percent of that figure or about 13,247 

grant recipients will be working toward 

their teaching obligation for a total of 

66,236 grant recipients who will receive 

the annual notice from the Secretary as 

required under final § 686.43(a)(2). We 

estimate that grant recipients will 

require 10 minutes (.17 hours) to review 

the information provided in each annual 

notice. We estimate the total burden of 

11,260 hours (66,236 × .17 hours). 

There will be burden on those 

recipients who are notified that their 


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Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 49819 

TEACH Grant will be converted to a 

loan if the recipient does not submit 

required documentation to show that 

they are satisfying the service 

obligation. Based on the Department’s 

data, during calendar year 2018 there 

were a total of 10,591 TEACH Grant 

recipients whose grants were converted 

to loans based on the recipients’ 

voluntary request, or because the 

recipient was out of time to perform the 

service obligation or because the 

recipient did not provide evidence of 

meeting the service obligation as 

required under § 686.43(a)(4). We 

estimate that grant recipients will 

require 10 minutes (.17 hours) to review 

the information in the notice. We 

estimate a total burden of 1,800 burden 

hours (10,591 × .17 hours). 

Additionally, there will be burden on 

any TEACH Grant recipient whose grant 

was involuntarily converted to a Direct 

Unsubsidized Loan to request 

reconsideration from the Secretary. 

Based on the Department’s data, during 

calendar year 2018 there were 282 

correctable conversions of TEACH 

Grants into loans. We estimate that a 

recipient will require 15 minutes (.25 

hours) to gather documentation to 

present to the Secretary and make such 

a request as required under 

§ 686.43(a)(5). We estimate a total 

burden of 71 burden hours (282 × .25 

hours). 

We estimate a total burden of 13,131 

burden hours under OMB Control 

Number 1845–0157. 

§ 686.43—OBLIGATION TO REPAY THE GRANT

[OMB control number 1845–0157] 

Entity Respondent Responses 

Time to 

respond 

(hours) 

Burden hours 

Individual (a)(2) ................................................................................................ 66,236 66,236 .17 11,260 

Individual (a)(4) ................................................................................................ * 10,591 .17 1,800 

Individual (a)(5) ................................................................................................ * 282 .25 71 

Total .......................................................................................................... 66,236 77,109 ........................ 13,131 

* These respondents will be part of the universe of respondents who receive the annual notifications and are not summed to avoid duplication 

of respondents. 

The estimated cost to the recipients is 

$1,680,714, based on the $29.48 per 

hour averaged for 2018 elementary, 

middle school and high school teacher 

salaries from the 2019 Bureau of Labor 

Statistics Occupational Handbook. 

Regulatory section Information collection 

OMB control No. and 

estimated burden 

(change in burden) 

Estimated 

costs 

§ 686.12 Agreement to 

serve or repay.

Under final § 686.12 the TEACH Grant agreement to serve or repay will 

need to be expanded and updated with revised definitions, requirements, and explanations of the program and participant conditions, and 

options as discussed in the preamble.

1845–0083 +25,397 

hours.

$748,704 

§ 686.32 Counseling requirements.The final regulations in § 686.32 will expand the information that is provided to TEACH Grant recipients during initial, subsequent, and exit 

counseling. The final regulations add a new conversion counseling requirement for grant recipients whose TEACH Grants are converted to 

Direct Unsubsidized Loans.

1845–0084 +502 hours 14,799 

§ 686.40 Documenting 

the service obligation.

The final regulations will clarify the requirements regarding the documentation of completion of the teaching service obligation in the 

TEACH Grant Program and how it is reported.

1845–0158 +17,494 

hours.

515,723 

§ 686.41 Periods of suspension.The final regulations will add new conditions under which a TEACH Grant 

recipient may receive a temporary suspension of the period for completing the service obligation.

1845–0158 +485 hours 14,298 

§ 686.42 Discharge of 

agreement to serve or 

repay.

The final regulations will revise the language for conditions under which a 

TEACH Grant recipient may discharge an agreement to serve or repay 

based on military service.

1845–0158 +3 hours ..... 88 

§ 686.43 Obligation to 

repay the grant.

The final regulations will simplify the rules governing when a TEACH 

Grant will be converted to a Direct Unsubsidized Loan, as well as provide for annual notifications from the Secretary to the recipient regarding the status of a recipient’s TEACH Grant service obligation. Under 

the final regulations, TEACH Grant recipients can request conversion if 

the recipient decides not to fulfill the TEACH Grant obligations for any 

reason or if the recipient fails to begin or maintain qualifying teaching 

service within a timeframe to complete the service obligation in the requisite eight-year period. Additionally, the final regulations describe the 

notifications the Secretary will annually send to all TEACH Grant recipients regarding the service obligation requirements.

1845–0157 +13,131 

hours.

387,102 

Collections of Information 

The total burden hours and change in 

burden hours associated with each OMB 

control number affected by the final 

regulations follows: 


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49820 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

Control No. Total burden 

hours 

Change in 

burden hours 

1845–0083 .. 25,397 No change. 

1845–0084 .. 37,175 +502. 

1845–0158 .. 17,982 +17,982. 

1845–0157 .. 13,131 +13,131. 

Total ..... 93,685 31,615. 

Intergovernmental Review 

These programs are not subject to 

Executive Order 12372 and the 

regulations in 34 CFR part 79. 

Assessment of Educational Impact 

In the NPRM we requested comments 

on whether the regulations would 

require transmission of information that 

any other or authority of the United 

States gathers or makes available. 

Based on the response to the NPRM 

and on our review, we have determined 

that these final regulations do not 

require transmission of information that 

any other agency or authority of the 

United States gathers or makes 

available. 

Accessible Format: Individuals with 

disabilities can obtain this document in 

an accessible format (e.g., braille, large 

print, audiotape, or compact disc) on 

request to the program contact person 

listed under FOR FURTHER INFORMATION

CONTACT. 

Electronic Access to This Document: 

The official version of this document is 

the document published in the Federal 

Register. You may access the official 

edition of the Federal Register and the 

Code of Federal Regulations at 

www.govinfo.gov. At this site you can 

view this document, as well as all other 

documents of this Department 

published in the Federal Register, in 

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(Catalog of Federal Domestic Assistance 

Number does not apply.) 

List of Subjects 

34 CFR Part 674 

Loan programs—education, Reporting 

and recordkeeping, Student aid. 

34 CFR Part 675 

Colleges and universities, 

Employment, Grant programs— 

education, Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 676 

Grant programs—education, 

Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 682 

Administrative practice and 

procedure, Colleges and universities, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

34 CFR Part 685 

Administrative practice and 

procedure, Colleges and universities, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

34 CFR Part 686 

Administrative practice and 

procedure, Colleges and universities, 

Education, Elementary and secondary 

education, Grant programs—education, 

Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 690 

Colleges and universities, Education 

of disadvantaged, Grant programs— 

education, Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 692 

Colleges and universities, Grant 

programs—education, Reporting and 

recordkeeping requirements, Student 

aid. 

34 CFR Part 694 

Colleges and universities, Elementary 

and secondary education, Grant 

programs—education, Reporting and 

recordkeeping requirements, Student 

aid. 

Betsy DeVos, 

Secretary of Education. 

For the reasons discussed in the 

preamble, the Secretary of Education 

amends parts 674, 675, 676, 682, 685, 

686, 690, 692, and 694 of title 34 of the 

Code of Federal Regulations as follows: 

PART 674—FEDERAL PERKINS LOAN 

PROGRAM 

■ 1. The authority citation for part 674 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, 1087aa– 

1087hh; Pub. L. 111–256, 124 Stat. 2643; 

unless otherwise noted. 

■ 2. Section 674.9 is amended by: 

■ a. In the introductory text, adding the 

words ‘‘Prior to October 1, 2017,’’ at the 

beginning of the sentence, removing 

‘‘A’’ and adding ‘‘a’’ in its place. , and 

removing the word ‘‘is’’ and adding in 

its place the word ‘‘was’’; and 

■ b. Revising paragraph (c). 

The revision reads as follows: 

§ 674.9 Student eligibility. 

* * * * * 

(c) Has financial need as determined 

in accordance with part F of title IV of 

the HEA. 

* * * * * 

§ 674.35 [Amended] 

■ 3. Section 674.35 is amended by 

removing paragraph (c)(5)(iv) and 

redesignating paragraph (c)(5)(v) as 

(c)(5)(iv). 

■ 4. Section 674.36 is amended by 

revising paragraph (c)(4) to read as 

follows: 

§ 674.36 Deferment of repayment—NDSLs 

made on or after October 1, 1980, but before 

July 1, 1993. 

* * * * * 

(c) * * * 

(4) A full-time volunteer in service 

which the Secretary has determined is 

comparable to service in the Peace 

Corps or under the Domestic Volunteer 

Service Act of 1973 (ACTION 

programs). The Secretary considers that 

a borrower is providing comparable 

service if he or she satisfies the 

following four criteria: 

(i) The borrower serves in an 

organization that is exempt from 

taxation under the provisions of section 

501(c)(3) of the Internal Revenue Code 

of 1954. 

(ii) The borrower provides service to 

low-income persons and their 

communities to assist them in 

eliminating poverty and poverty-related 

human, social, and environmental 

conditions. 

(iii) The borrower does not receive 

compensation that exceeds the rate 

prescribed under section 6 of the Fair 

Labor Standards Act of 1938 (the 

Federal minimum wage), except that the 

tax-exempt organization may provide 

health, retirement, and other fringe 

benefits to the volunteer that are 

substantially equivalent to the benefits 

offered to other employees of the 

organization. 

(iv) The borrower has agreed to serve 

on a full-time basis for a term of at least 

one year. 

* * * * * 

PART 675—FEDERAL WORK-STUDY 

PROGRAMS 

■ 5. The authority citation for part 675 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, 1087, 1094; 42 

U.S.C. 2751–2756b; unless otherwise noted. 


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■ 6. Section 675.9 is amended by 

revising paragraph (c) to read as follows: 

§ 675.9 Student eligibility. 

* * * * * 

(c) Has financial need as determined 

in accordance with part F of title IV of 

the HEA. 

■ 7. Section 675.20 is amended by 

revising paragraph (c)(2)(iv) to read as 

follows: 

§ 675.20 Eligible employers and general 

conditions and limitation on employment. 

* * * * * 

(c) * * * 

(2) * * * 

(iv) Involve the construction, 

operation, or maintenance of so much of 

any facility as is used or is to be used 

for instruction that is predominantly 

devotional and religious or as a place for 

religious worship, except to the extent 

that excluding such work would impose 

a substantial burden on a person’s 

exercise of religion. 

* * * * * 

PART 676—FEDERAL 

SUPPLEMENTAL EDUCATIONAL 

OPPORTUNITY GRANT PROGRAM 

■ 8. The authority citation for part 676 

continues to read as follows: 

Authority: 20 U.S.C. 1070b–1070b–3, 

unless otherwise noted. 

■ 9. Section 676.9 is amended by 

revising paragraph (c) to read as follows: 

§ 676.9 Student eligibility. 

* * * * * 

(c) Has financial need as determined 

in accordance with part F of title IV of 

the HEA. 

PART 682—FEDERAL FAMILY 

EDUCATION LOAN (FFEL) PROGRAM 

■ 10. The authority citation for part 682 

continues to read as follows: 

Authority: 20 U.S.C. 1071–1087–4, unless 

otherwise noted. 

§ 682.210 [Amended] 

■ 11. Section 682.210 is amended by 

removing and reserving paragraph 

(m)(1)(iv). 

§ 682.301 [Amended] 

■ 12. Section 682.301 is amended by 

removing paragraph (a)(2) and 

redesignating paragraph (a)(3) as 

paragraph (a)(2). 

PART 685—WILLIAM D. FORD 

FEDERAL DIRECT LOAN PROGRAM 

■ 13. The authority citation for part 685 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, 1087a, et seq., 

unless otherwise noted. 

§ 685.200 [Amended] 

■ 14. Section 685.200 is amended by 

removing and reserving paragraph 

(a)(2)(ii). 

■ 15. Section 685.219 is amended in 

paragraph (b) by revising the definition 

of ‘‘public service organization’’ and by 

revising paragraph (c)(1)(ii) to read as 

follows: 

§ 685.219 Public Service Loan Forgiveness 

Program. 

* * * * * 

(b) * * * 

Public service organization means: 

(i) A Federal, State, local, or Tribal 

government organization, agency, or 

entity; 

(ii) A public child or family service 

agency; 

(iii) A non-profit organization under 

section 501(c)(3) of the Internal Revenue 

Code that is exempt from taxation under 

section 501(a) of the Internal Revenue 

Code; 

(iv) A Tribal college or university; or 

(v)(A) A private organization that 

provides the following public services: 

Emergency management, military 

service, public safety, law enforcement, 

public interest law services, early 

childhood education (including 

licensed or regulated child care, Head 

Start, and State funded prekindergarten), public service for 

individuals with disabilities and the 

elderly, public health (including nurses, 

nurse practitioners, nurses in a clinical 

setting, and full-time professionals 

engaged in health care practitioner 

occupations and health care support 

occupations, as such terms are defined 

by the Bureau of Labor Statistics), 

public education, public library 

services, school library or other schoolbased services; and 

(B) Is not a business organized for 

profit, a labor union, or a partisan 

political organization. 

* * * * * 

(c) * * * 

(1) * * * 

(ii) Is employed full-time by a public 

service organization or serving in a fulltime AmeriCorps or Peace Corps 

position— 

(A) When the borrower makes the 120 

monthly payments described under 

paragraph (c)(1)(iii) of this section; 

(B) At the time of application for loan 

forgiveness; and 

(C) At the time the remaining 

principal and accrued interest are 

forgiven. 

* * * * * 

PART 686—TEACHER EDUCATION 

ASSISTANCE FOR COLLEGE AND 

HIGHER EDUCATION (TEACH) GRANT 

PROGRAM 

■ 16. The authority citation for part 686 

continues to read as follows: 

Authority: 20 U.S.C. 1070g, et seq., unless 

otherwise noted. 

■ 17. Section 686.1 is revised to read as 

follows: 

§ 686.1 Scope and purpose. 

The TEACH Grant program awards 

grants to students who intend to teach, 

to help meet the cost of their 

postsecondary education. In exchange 

for the grant, the student must agree to 

serve as a full-time teacher in a highneed field in a school serving lowincome students, or as a full-time 

teacher in a high-need field for an 

educational service agency serving lowincome students, for at least four 

academic years within eight years of 

ceasing enrollment at the institution 

where the student received the grant or, 

in the case of a student who receives a 

TEACH Grant at one institution and 

subsequently transfers to another 

institution and enrolls in another 

TEACH Grant-eligible program, within 

eight years of ceasing enrollment at the 

other institution. The eight-year period 

for completing the required four years of 

teaching does not include periods of 

suspension in accordance with § 686.41. 

If the student does not satisfy the 

service obligation, the amounts of the 

TEACH Grants received are treated as a 

Direct Unsubsidized Loan and must be 

repaid with interest charged from the 

date of each TEACH Grant 

disbursement. A TEACH Grant that has 

been converted to a Direct Unsubsidized 

Loan can be reconverted to a grant only 

in accordance with § 686.43. 

■ 18. Section 686.2 is amended: 

■ a. In paragraph (b), by adding in 

alphabetical order and entry for ‘‘Free 

application for Federal student aid 

(FAFSA)’’; and 

■ b. In paragraph (d) by: 

■ i. Removing the definition of 

‘‘Agreement to serve (ATS)’’ and adding 

in alphabetical order a definition for 

‘‘Agreement to serve or repay’’; 

■ ii. Adding in alphabetical order a 

definition for ‘‘Educational service 

agency’’; 

■ iii. In paragraph (5) of the definition 

of ‘‘High-need field’’, adding 

‘‘, including, but not limited to, 

computer science’’ after the word 

‘‘Science’’; 

■ iv. In paragraph (7) of the definition 

of ‘‘High-need field’’, removing the 

words ‘‘in accordance with 34 CFR 

682.210(q)’’; 


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■ v. Revising the definition of ‘‘Highly 

qualified’’; 

■ vi. Removing the definition of 

‘‘School serving low-income students 

(low-income school)’’ and adding in 

alphabetical order a definition for 

‘‘School or educational service agency 

serving low-income students (lowincome school)’’; 

■ vii. Revising the definition of 

‘‘TEACH Grant-eligible program’’; and 

■ viii. Adding in alphabetical order a 

definition for ‘‘Teacher Shortage Area 

Nationwide Listing (Nationwide List)’’. 

The additions and revisions read as 

follows: 

§ 686.2 Definitions. 

* * * * * 

(b) * * * 

Free application for Federal student 

aid (FAFSA). 

* * * * * 

(d) * * * 

Agreement to serve or repay: An 

agreement under which the individual 

receiving a TEACH Grant commits to 

meet the service obligation or repay the 

loan as described in § 686.12 and to 

comply with notification and other 

provisions of the agreement. 

* * * * * 

Educational service agency: A 

regional public multiservice agency 

authorized by State statute to develop, 

manage, and provide services or 

programs to local educational agencies 

(LEAs). 

* * * * * 

Highly qualified: Has the meaning set 

forth in paragraphs (i) through (iv) of 

this definition, or the meaning set forth 

in section 602(10) of the Individuals 

With Disabilities Education Act. 

(i) When used with respect to any 

public elementary school or secondary 

school teacher in a State, means that— 

(A) The teacher has obtained full State 

certification as a teacher (including 

certification obtained through 

alternative routes to certification) or 

passed the State teacher licensing 

examination, and holds a license to 

teach in such State, except that when 

used with respect to any teacher 

teaching in a public charter school, the 

term means that the teacher meets the 

requirements set forth in the State’s 

public charter school law; and 

(B) The teacher has not had 

certification or licensure requirements 

waived on an emergency, temporary, or 

provisional basis. 

(ii) When used with respect to— 

(A) An elementary school teacher who 

is new to the profession, means that the 

teacher— 

(1) Holds at least a bachelor’s degree; 

and 

(2) Has demonstrated, by passing a 

rigorous State test, subject knowledge 

and teaching skills in reading, writing, 

mathematics, and other areas of the 

basic elementary school curriculum 

(which may consist of passing a Staterequired certification or licensing test or 

tests in reading, writing, mathematics, 

and other areas of the basic elementary 

school curriculum); or 

(B) A middle or secondary school 

teacher who is new to the profession, 

means that the teacher holds at least a 

bachelor’s degree and has demonstrated 

a high level of competency in each of 

the academic subjects in which the 

teacher teaches by— 

(1) Passing a rigorous State academic 

subject test in each of the academic 

subjects in which the teacher teaches 

(which may consist of a passing level of 

performance on a State-required 

certification or licensing test or tests in 

each of the academic subjects in which 

the teacher teaches); or 

(2) Successful completion, in each of 

the academic subjects in which the 

teacher teaches, of an academic major, 

a graduate degree, coursework 

equivalent to an undergraduate 

academic major, or advanced 

certification or credentialing. 

(iii) When used with respect to an 

elementary, middle, or secondary school 

teacher who is not new to the 

profession, means that the teacher holds 

at least a bachelor’s degree and— 

(A) Has met the applicable standard 

in paragraph (ii) of this definition, 

which includes an option for a test; or 

(B) Demonstrates competence in all 

the academic subjects in which the 

teacher teaches based on a highly 

objective uniform State standard of 

evaluation that— 

(1) Is set by the State for both gradeappropriate academic subject matter 

knowledge and teaching skills; 

(2) Is aligned with challenging State 

academic content and student academic 

achievement standards and developed 

in consultation with core content 

specialists, teachers, principals, and 

school administrators; 

(3) Provides objective, coherent 

information about the teacher’s 

attainment of core content knowledge in 

the academic subjects in which a 

teacher teaches; 

(4) Is applied uniformly to all teachers 

in the same academic subject and the 

same grade level throughout the State; 

(5) Takes into consideration, but is 

not based primarily on, the time the 

teacher has been teaching in the 

academic subject; 

(6) Is made available to the public 

upon request; and 

(7) May involve multiple, objective 

measures of teacher competency. 

(iv)(A) When used with respect to any 

public, or other non-profit private, 

elementary or secondary school teacher 

who is exempt from State certification 

requirements means that the teacher is 

permitted to and does satisfy rigorous 

subject knowledge and skills tests by 

taking competency tests in the 

applicable grade levels and subject 

areas. 

(B) For purposes of paragraph (iv)(A) 

of this definition, the competency tests 

taken by a private school teacher must 

be recognized by five or more States for 

the purpose of fulfilling the highly 

qualified teacher requirements as 

described in paragraphs (i) through (iii) 

of this definition, and the score 

achieved by the teacher on each test 

must equal or exceed the average 

passing score of those five States. 

* * * * * 

School or educational service agency 

serving low-income students (lowincome school): An elementary school, 

secondary school, or educational service 

agency that is listed in the Department’s 

Teacher Cancellation Low-Income 

(TCLI) Directory. The Secretary 

considers all elementary and secondary 

schools and educational service 

agencies operated by the Bureau of 

Indian Education (BIE) in the 

Department of the Interior or operated 

on Indian reservations by Indian Tribal 

groups under contract or grant with the 

BIE to qualify as schools or educational 

service agencies serving low-income 

students. 

* * * * * 

TEACH Grant-eligible program: An 

eligible program, as defined in 34 CFR 

668.8, is a program of study at a TEACH 

Grant-eligible institution that is 

designed to prepare an individual to 

teach as a highly qualified teacher in a 

high-need field and leads to a 

baccalaureate or master’s degree, or is a 

post-baccalaureate program of study. A 

two-year program of study that is 

acceptable for full credit toward a 

baccalaureate degree is considered to be 

a program of study that leads to a 

baccalaureate degree. 

* * * * * 

Teacher Shortage Area Nationwide 

Listing (Nationwide List): A list of 

teacher shortage areas, as defined in 34 

CFR 682.210(q)(8)(vii), in each State. 

* * * * * 

■ 19. Section 686.10 is revised to read 

as follows: 

§ 686.10 Application. 

To receive a grant under this part, a 

student must— 


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(a) Complete and submit the Free 

application for Federal student aid 

(FAFSA) in accordance with the 

instructions in the FAFSA; 

(b) Complete and sign an agreement to 

serve or repay in accordance with 

§ 686.12; and 

(c) Provide any additional information 

requested by the Secretary and the 

institution. 

§ 686.11 [Amended] 

■ 20. Section 686.11 is amended: 

■ a. In paragraph (a)(1)(i), by removing 

the words ‘‘submitted a completed 

application’’ and adding in their place 

the words ‘‘met the application 

requirements in § 686.10’’; 

■ b. By removing paragraph (a)(1)(ii); 

■ c. By redesignating paragraphs 

(a)(1)(iii), (iv), and (v) as paragraphs 

(a)(1)(ii), (iii), and (iv), respectively; 

■ d. In paragraph (b) introductory text, 

by removing the words ‘‘submitted a 

completed application’’ and adding in 

their place the words ‘‘met the 

application requirements in § 686.10’’; 

■ e. By removing paragraph (b)(1); and 

■ f. By redesignating paragraphs (b)(2) 

and (3) as paragraphs (b)(1) and (2), 

respectively. 

■ 21. Section 686.12 is revised to read 

as follows: 

§ 686.12 Agreement to serve or repay. 

(a) General. A student who meets the 

eligibility requirements in § 686.11 may 

receive a TEACH Grant only after he or 

she signs an agreement to serve or repay 

provided by the Secretary and receives 

counseling in accordance with § 686.32. 

(b) Contents of the agreement to serve 

or repay. The agreement to serve or 

repay— 

(1) Provides that, for each TEACH 

Grant-eligible program for which the 

student received TEACH Grant funds, 

the grant recipient must fulfill a service 

obligation by performing creditable 

teaching service by serving— 

(i) As a full-time teacher for a total of 

not less than four elementary or 

secondary academic years within eight 

years after the date the recipient ceased 

to be enrolled at the institution where 

the recipient received the TEACH Grant, 

or in the case of a student who receives 

a TEACH Grant at one institution and 

subsequently transfers to another 

institution and enrolls in another 

TEACH Grant-eligible program, within 

eight years of ceasing enrollment at the 

other institution; 

(ii) In a low-income school as defined 

in § 686.2(d) and subject to the 

requirements under § 686.40(a)(3); 

(iii) As a highly qualified teacher as 

defined in § 686.2(d); and 

(iv) In a high-need field in the 

majority of classes taught during each 

elementary and secondary academic 

year; 

(2) Requires the grant recipient to 

submit, upon completion of each year of 

service, documentation of the service in 

the form of a certification by a chief 

administrative officer of the school; 

(3) Explains that the eight-year period 

for completing the service obligation 

does not include periods of suspension 

in accordance with § 686.41; 

(4) Explains the conditions under 

which a TEACH Grant may be converted 

to a Direct Unsubsidized Loan, as 

described in § 686.43; 

(5) Explains that, if a TEACH Grant is 

converted to a Direct Unsubsidized 

Loan, the grant recipient must repay the 

loan in full, with interest charged from 

the date of each TEACH Grant 

disbursement; and 

(6) Explains that to avoid further 

accrual of interest as described in 

paragraph (b)(5) of this section, a grant 

recipient who decides not to teach in a 

qualified school or field, or who for any 

other reason no longer intends to satisfy 

the service obligation, may request that 

the Secretary convert his or her TEACH 

Grant to a Direct Unsubsidized Loan so 

that the grant recipient may begin 

repaying immediately, instead of 

waiting for the TEACH Grant to be 

converted to a loan under the condition 

described in § 686.43(a)(1)(ii); and 

(7) Explains that a grant recipient 

whose TEACH Grant was converted to 

a Direct Unsubsidized Loan based on a 

request from the recipient in accordance 

with § 686.43(a)(1)(i) may request that 

the Secretary reconvert the recipient’s 

loan to a TEACH Grant as provided in 

§ 686.43(a)(8); and 

(8) Requires the grant recipient to 

comply with the terms, conditions, and 

other requirements consistent with 

§§ 686.40 through 686.43 that the 

Secretary determines to be necessary. 

(c) Completion of the service 

obligation. (1) A grant recipient must 

complete one service obligation for all 

TEACH Grants received for 

undergraduate study, and one service 

obligation for all TEACH Grants 

received for graduate study. Each 

service obligation begins when the grant 

recipient ceases enrollment at the 

institution where the TEACH Grants 

were received, or, in the case of a grant 

recipient who receives a TEACH Grant 

at one institution and subsequently 

transfers to another institution, within 

eight years from the date the grant 

recipient ceases enrollment at the other 

institution. However, creditable 

teaching service, a suspension approved 

under § 686.41(a)(2), or a military 

discharge granted under § 686.42(c)(2) 

may apply to more than one service 

obligation. 

(2) Unless paragraph (c)(3) of this 

section applies— 

(i) In the case of a TEACH Grant 

recipient who withdraws from an 

institution before completing a 

baccalaureate or post-baccalaureate 

program of study for which he or she 

received TEACH Grants, but later reenrolls at the same institution or at a 

different institution in either the same 

baccalaureate or post-baccalaureate 

program or in a different TEACH Granteligible baccalaureate or postbaccalaureate program prior to the date 

that his or her TEACH Grants are 

converted to Direct Unsubsidized Loans 

under § 686.43(a)(1)(ii) and receives 

additional TEACH Grants or the 

Secretary otherwise confirms that the 

grant recipient has re-enrolled in a 

TEACH Grant-eligible program, the 

Secretary adjusts the starting date of the 

period for completing the service 

obligation to begin when the grant 

recipient ceases to be enrolled at the 

institution where he or she has reenrolled; and 

(ii) In the case of a TEACH Grant 

recipient who withdraws from an 

institution before completing a master’s 

degree program of study for which he or 

she received TEACH Grants, but later reenrolls at the same institution or at a 

different institution in either the same 

master’s degree program or in a different 

TEACH Grant eligible master’s degree 

program prior to the date that his or her 

TEACH Grants are converted to Direct 

Unsubsidized Loans under 

§ 686.43(a)(1)(ii) and receives additional 

TEACH Grants or the Secretary 

otherwise confirms that the grant 

recipient has re-enrolled in a TEACH 

Grant-eligible program, the Secretary 

adjusts the starting date of the period for 

completing the service obligation to 

begin when the grant recipient ceases to 

be enrolled at the institution where he 

or she has re-enrolled. 

(3) In the case of a TEACH Grant 

recipient covered under paragraph 

(c)(2)(i) or (ii) of this section who 

completed one or more complete 

academic years of creditable teaching 

service as described in § 686.12(b) 

during the period between the grant 

recipient’s withdrawal and reenrollment— 

(i) The Secretary does not adjust the 

starting date of the period for 

completing the service obligation unless 

requested by the recipient; 

(ii) The completed teaching service 

counts toward satisfaction of the grant 

recipient’s service obligation under 

paragraph (c)(2)(i) of this section; and 


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(iii) If the grant recipient continues to 

perform creditable teaching service after 

re-enrolling in a TEACH Grant-eligible 

program, the grant recipient may receive 

credit toward satisfaction of the service 

obligation for any complete academic 

years of creditable teaching performed 

while the recipient is concurrently 

enrolled in the TEACH Grant-eligible 

program only if the recipient does not 

request and receive a temporary 

suspension of the period for completing 

the service obligation under 

§ 686.41(a)(1)(i). 

(d) Teaching in a high-need field 

listed in the Nationwide List. For a grant 

recipient’s teaching service in a highneed field listed in the Nationwide List 

to count toward satisfying the 

recipient’s service obligation, the highneed field in which he or she prepared 

to teach must be listed in the 

Nationwide List for the State in which 

the grant recipient teaches— 

(1) For teaching service performed 

before July 1, 2010, at the time the grant 

recipient begins teaching in that field, 

even if that field subsequently loses its 

high-need designation for that State; or 

(2) For teaching service performed on 

or after July 1, 2010— 

(i) At the time the grant recipient 

begins teaching in that field, even if that 

field subsequently loses its high-need 

designation for that State; or 

(ii) At the time the grant recipient 

signed the agreement to serve or repay 

or received the TEACH Grant, even if 

that field subsequently loses its highneed designation for that State before 

the grant recipient begins teaching in 

that field. 

§ 686.21 [Amended] 

■ 22. Section 686.21 is amended: 

■ a. In paragraphs (a)(2)(i) and (ii), by 

removing the word ‘‘aggregate’’ and 

adding in its place the word ‘‘total’’; and 

■ b. In paragraph(a)(2)(ii), by removing 

the words ‘‘a master’s degree’’ and 

adding in their place the words 

‘‘graduate study’’. 

§ 686.31 [Amended] 

■ 23. Section 686.31 is amended: 

■ a. In paragraph (a)(3), by adding the 

words ‘‘or repay’’ after the word ‘‘serve’’ 

and 

■ b. In paragraph (e)(2)(ii), by removing 

the word ‘‘Federal’’ before the words 

‘‘Direct Unsubsidized Loan’’. 

■ 24. Section 686.32 is amended by 

revising paragraphs (a)(3), (b)(3), (c)(4), 

and (d) and adding paragraph (e) to read 

as follows: 

§ 686.32 Counseling Requirements. 

(a) * * * 

(3) The initial counseling must— 

(i) Explain the terms and conditions 

of the TEACH Grant agreement to serve 

or repay as described in § 686.12; 

(ii) Provide the grant recipient with 

information about how to identify lowincome schools and documented highneed fields; 

(iii) Inform the grant recipient that, for 

the teaching to count towards the 

recipient’s service obligation, the highneed field in which he or she has 

prepared to teach must be— 

(A) One of the six high-need fields 

listed in § 686.2; or 

(B) A high-need field that is listed in 

the Nationwide List for the State in 

which the grant recipient teaches— 

(1) At the time the grant recipient 

begins teaching in that field, even if that 

field subsequently loses its high-need 

designation for that State; or 

(2) For teaching service performed on 

or after July 1, 2010, at the time the 

grant recipient signed the agreement to 

serve or repay or received the TEACH 

Grant, even if that field subsequently 

loses its high-need designation for that 

State before the grant recipient begins 

teaching in that field; 

(iv) Inform the grant recipient of the 

opportunity to request a suspension of 

the eight-year period for completion of 

the agreement to serve or repay and the 

conditions under which a suspension 

may be granted in accordance with 

§ 686.41; 

(v) Explain to the grant recipient that 

conditions, such as conviction of a 

felony, could preclude the grant 

recipient from completing the service 

obligation; 

(vi) Emphasize to the grant recipient 

that if the grant recipient fails or refuses 

to complete the service obligation 

contained in the agreement to serve or 

repay or any other condition of the 

agreement to serve or repay— 

(A) The TEACH Grant must be repaid 

as a Direct Unsubsidized Loan; and 

(B) The grant recipient will be 

obligated to repay the full amount of 

each grant and the accrued interest from 

each disbursement date; 

(vii) Explain the circumstances, as 

described in § 686.43, under which a 

TEACH Grant will be converted to a 

Direct Unsubsidized Loan; 

(viii) Explain that to avoid further 

accrual of interest as described in 

§ 686.12(b)(4)(ii), a grant recipient who 

decides not to teach in a qualified 

school or field, or who for any other 

reason no longer intends to satisfy the 

service obligation, may request that the 

Secretary convert his or her TEACH 

Grant to a Direct Unsubsidized Loan 

that the grant recipient may begin 

repaying immediately, instead of 

waiting for the TEACH Grant to be 

converted to a loan under the condition 

described in § 686.43(a)(1)(ii); 

(ix) Emphasize that, once a TEACH 

Grant is converted to a Direct 

Unsubsidized Loan, it may be 

reconverted to a grant only if— 

(A) The Secretary determines, based 

on documentation provided by the 

recipient or in the Secretary’s records, 

that the grant recipient was satisfying 

the service obligation as described in 

§ 686.12 or that the grant was converted 

to a loan in error; or 

(B) In the case of a grant recipient 

whose TEACH Grant was converted to 

a Direct Unsubsidized Loan in 

accordance with § 686.43(a)(1)(i), the 

grant recipient requests that the 

Secretary reconvert the loan to a grant 

and is determined to be eligible for 

reconversion in accordance with 

§ 686.43(a)(8); 

(x) Review for the grant recipient 

information on the availability of the 

Department’s Federal Student Aid 

Ombudsman’s office; 

(xi) Describe the likely consequences 

of loan default, including adverse credit 

reports, garnishment of wages, Federal 

offset, and litigation; and 

(xii) Inform the grant recipient of 

sample monthly repayment amounts 

based on a range of student loan 

indebtedness. 

(b) * * * 

(3) Subsequent counseling must— 

(i) Review the terms and conditions of 

the TEACH Grant agreement to serve or 

repay as described in § 686.12; 

(ii) Emphasize to the grant recipient 

that if the grant recipient fails or refuses 

to complete the service obligation 

contained in the agreement to serve or 

repay or any other condition of the 

agreement to serve or repay— 

(A) The TEACH Grant must be repaid 

as a Direct Unsubsidized Loan; and 

(B) The grant recipient will be 

obligated to repay the full amount of the 

grant and the accrued interest from the 

disbursement date; 

(iii) Explain the circumstances, as 

described in § 686.43, under which a 

TEACH Grant will be converted to a 

Direct Unsubsidized Loan; 

(iv) Explain that to avoid further 

accrual of interest as described in 

§ 686.12(b)(4)(ii), a grant recipient who 

decides not to teach in a qualified 

school or field, or who for any other 

reason no longer intends to satisfy the 

service obligation, may request that the 

Secretary convert his or her TEACH 

Grant to a Direct Unsubsidized Loan 

that the grant recipient may begin 

repaying immediately, instead of 

waiting for the TEACH Grant to be 

converted to a loan under the condition 

described in § 686.43(a)(1)(ii); 


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(v) Emphasize that, once a TEACH 

Grant is converted to a Direct 

Unsubsidized Loan, it may be 

reconverted to a grant only if— 

(A) The Secretary determines, based 

on documentation provided by the 

recipient or in the Secretary’s records, 

that the grant recipient was satisfying 

the service obligation as described in 

§ 686.12 or that the grant was converted 

to a loan in error; or 

(B) In the case of a grant recipient 

whose TEACH Grant was converted to 

a Direct Unsubsidized Loan in 

accordance with § 686.43(a)(1)(i), the 

grant recipient requests that the 

Secretary reconvert the loan to a grant 

and is determined to be eligible for 

reconversion in accordance with 

§ 686.43(a)(8); and 

(vi) Review for the grant recipient 

information on the availability of the 

Department’s Federal Student Aid 

Ombudsman’s office. 

(c) * * * 

(4) The exit counseling must— 

(i) Review the terms and conditions of 

the TEACH Grant agreement to serve or 

repay as described in § 686.12 and 

emphasize to the grant recipient that the 

four-year service obligation must be 

completed within the eight-year period 

described in § 686.12; 

(ii) Explain the treatment of a grant 

recipient who withdraws from and then 

reenrolls in a TEACH Grant-eligible 

program at a TEACH Grant eligible 

institution as described in § 686.12(c); 

(iii) Inform the grant recipient of the 

opportunity to request a suspension of 

the eight-year period for completion of 

the service obligation and the 

conditions under which a suspension 

may be granted in accordance with 

§ 686.41; 

(iv) Provide the grant recipient with 

information about how to identify lowincome schools and documented highneed fields; 

(v) Inform the grant recipient that, for 

the teaching to count towards the 

recipient’s service obligation, the highneed field in which he or she has 

prepared to teach must be— 

(A) One of the six high-need fields 

listed in § 686.2; or 

(B) A high-need field that is listed in 

the Nationwide List for the State in 

which the grant recipient teaches— 

(1) At the time the grant recipient 

begins teaching in that field, even if that 

field subsequently loses its high-need 

designation for that State; or 

(2) For teaching service performed on 

or after July 1, 2010, at the time the 

grant recipient signed the agreement to 

serve or repay or received the TEACH 

Grant, even if that field subsequently 

loses its high-need designation for that 

State before the grant recipient begins 

teaching in that field; 

(vi) Emphasize to the grant recipient 

that if the grant recipient fails or refuses 

to complete the service obligation 

contained in the agreement to serve or 

repay or fails to meet any other 

condition of the agreement to serve or 

repay— 

(A) The TEACH Grant must be repaid 

as a Direct Unsubsidized Loan; and 

(B) The grant recipient will be 

obligated to repay the full amount of 

each grant and the accrued interest from 

each disbursement date; 

(vii) Explain to the grant recipient that 

the Secretary will, at least annually 

during the service obligation period, 

send the recipient the notice described 

in § 686.43(a)(2); 

(viii) Explain the circumstances, as 

described in § 686.43, under which a 

TEACH Grant will be converted to a 

Direct Unsubsidized Loan; 

(ix) Explain that to avoid further 

accrual of interest as described in 

§ 686.12(b)(4)(ii), a grant recipient who 

decides not to teach in a qualified 

school or field, or who for any other 

reason no longer intends to satisfy the 

service obligation, may request that the 

Secretary convert his or her TEACH 

Grant to a Direct Unsubsidized Loan 

that the grant recipient may begin 

repaying immediately, instead of 

waiting for the TEACH Grant to be 

converted to a loan under the condition 

described in § 686.43(a)(1)(ii); 

(x) Emphasize that once a TEACH 

Grant is converted to a Direct 

Unsubsidized Loan it may be 

reconverted to a grant only if— 

(A) The Secretary determines, based 

on documentation provided by the 

recipient or in the Secretary’s records, 

that the grant recipient was satisfying 

the service obligation as described in 

§ 686.12 or that the grant was converted 

to a loan in error; or 

(B) In the case of a grant recipient 

whose TEACH Grant was converted to 

a Direct Unsubsidized Loan in 

accordance with § 686.43(a)(1)(i), the 

grant recipient requests that the 

Secretary reconvert the loan to a grant 

and is determined to be eligible for 

reconversion in accordance with 

§ 686.43(a)(8); and 

(xi) Explain to the grant recipient how 

to contact the Secretary. 

(5) If exit counseling is conducted 

through interactive electronic means, an 

institution must take reasonable steps to 

ensure that each grant recipient receives 

the counseling materials and 

participates in and completes the exit 

counseling. 

* * * * * 

(d) Compliance. The institution must 

maintain documentation substantiating 

the institution’s compliance with 

paragraphs (a) through (c) of this section 

for each TEACH Grant recipient. 

(e) Conversion counseling. (1) At the 

time a TEACH Grant recipient’s TEACH 

Grant is converted to a Direct 

Unsubsidized Loan, the Secretary 

conducts conversion counseling with 

the recipient by interactive electronic 

means and by mailing written 

counseling materials to the most recent 

address provided by the recipient. 

(2) The conversion counseling— 

(i) Informs the borrower of the average 

anticipated monthly repayment amount 

based on the borrower’s indebtedness; 

(ii) Reviews for the borrower available 

repayment plan options, including 

standard, graduated, extended, incomecontingent, and income-based 

repayment plans, including a 

description of the different features of 

each plan and the difference in interest 

paid and total payments under each 

plan; 

(iii) Explains to the borrower the 

options to prepay each loan, to pay each 

loan on a shorter schedule, and to 

change repayment plans; 

(iv) Provides information on the 

effects of loan consolidation including, 

at a minimum— 

(A) The effects of consolidation on 

total interest to be paid, and length of 

repayment; 

(B) The effects of consolidation on a 

borrower’s underlying loan benefits, 

including grace periods, loan 

forgiveness, cancellation, and deferment 

opportunities; and 

(C) The options of the borrower to 

prepay the loan and to change 

repayment plans; 

(v) Includes debt-management 

strategies that are designed to facilitate 

repayment; 

(vi) Explains to the borrower the 

availability of Public Service Loan 

Forgiveness and teacher loan 

forgiveness; 

(vii) Explains how the borrower may 

request reconsideration of the 

conversion of the TEACH Grant to a 

Direct Unsubsidized Loan if the 

borrower believes that the grant was 

converted to a loan in error, or if the 

borrower can provide documentation 

showing that he or she was satisfying 

the service obligation as described in 

§ 686.12; 

(viii) Describes the likely 

consequences of default, including 

adverse credit reports, delinquent debt 

collection procedures under Federal 

law, and litigation; 

(ix) Informs the borrower of the grace 

period as described in § 686.43(c); 


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49826 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

(x) Provides— 

(A) A general description of the terms 

and conditions under which a borrower 

may obtain full or partial forgiveness or 

discharge of the loan (including under 

the Public Service Loan Forgiveness 

Program), defer repayment of the loan, 

or be granted a forbearance on 

repayment of the loan; and 

(B) A copy, either in print or by 

electronic means, of the information the 

Secretary makes available pursuant to 

section 485(d) of the HEA; 

(xi) Requires the borrower to provide 

current information concerning name, 

address, Social Security number, and 

driver’s license number and State of 

issuance, as well as the borrower’s 

permanent address; 

(xii) Reviews for the borrower 

information on the availability of the 

Federal Student Aid Ombudsman’s 

office; 

(xiii) Informs the borrower of the 

availability of title IV loan information 

in the National Student Loan Data 

System (NSLDS) and how NSLDS can 

be used to obtain title IV loan status 

information; 

(xiv) Provides a general description of 

the types of tax benefits that may be 

available to borrowers; 

(xv) Informs the borrower of the 

amount of interest that has accrued on 

the converted TEACH Grants and 

explains that any unpaid interest will be 

capitalized at the end of the grace 

period; and 

(xvi) In the case of a borrower whose 

TEACH Grant was converted to a Direct 

Unsubsidized Loan in accordance with 

§ 686.43(a)(1)(i), explains that the 

borrower may request that the Secretary 

reconvert the loan to a grant as provided 

in § 686.43(a)(8). 

■ 25. Section 686.40 is revised to read 

as follows: 

§ 686.40 Documenting the service 

obligation. 

(a) If a grant recipient is performing 

full-time teaching service in accordance 

with the agreement to serve or repay, or 

agreements to serve or repay if more 

than one agreement exists, the grant 

recipient must, upon completion of each 

of the four required elementary or 

secondary academic years of teaching 

service, provide to the Secretary 

documentation of that teaching service 

on a form approved by the Secretary and 

certified by the chief administrative 

officer of the school or educational 

service agency in which the grant 

recipient is teaching. The 

documentation must show that the grant 

recipient— 

(1) Taught full-time in a low-income 

school as a highly qualified teacher as 

defined in § 686.2(d); and 

(2)(i) Taught a majority of classes 

during the period being certified in any 

of the high-need fields of mathematics, 

science, a foreign language, bilingual 

education, English language acquisition, 

special education, or as a reading 

specialist; or 

(ii) Taught a majority of classes during 

the period being certified in another 

high-need field designated by that State 

and listed in the Nationwide List, in 

accordance with § 686.12(d). 

(b) For purposes of completing the 

service obligation, the elementary or 

secondary academic year may be 

counted as one of the grant recipient’s 

four complete elementary or secondary 

academic years if the grant recipient 

completes at least one-half of the 

elementary or secondary academic year 

and the grant recipient’s school 

employer considers the grant recipient 

to have fulfilled his or her contract 

requirements for the elementary or 

secondary academic year for the 

purposes of salary increases, tenure, and 

retirement if the grant recipient is 

unable to complete an elementary or 

secondary academic year due to— 

(1) A condition that is a qualifying 

reason for leave under the Family and 

Medical Leave Act of 1993 (FMLA) (29 

U.S.C. 2612(a)(1) and (3)); 

(2) A call or order to Federal or State 

active duty, or Active Service as a 

member of a Reserve Component of the 

Armed Forces named in 10 U.S.C. 

10101, or service as a member of the 

National Guard on full-time National 

Guard duty, as defined in 10 U.S.C. 

101(d)(5); or 

(3) Residing in or being employed in 

a federally declared major disaster area 

as defined in the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5122(2)). 

(c)(1) A grant recipient who taught in 

more than one qualifying school or 

qualifying educational service agency 

during an elementary or secondary 

academic year and demonstrates that 

the combined teaching service was the 

equivalent of full-time, as supported by 

the certification of one or more of the 

chief administrative officers of the 

schools or educational service agencies 

involved, is considered to have 

completed one elementary or secondary 

academic year of qualifying teaching. 

(2) If the school or educational service 

agency at which the grant recipient is 

employed meets the requirements of a 

low-income school in the first year of 

the grant recipient’s four elementary or 

secondary academic years of teaching 

and the school or educational service 

agency fails to meet those requirements 

in subsequent years, those subsequent 

years of teaching qualify for purposes of 

satisfying the service obligation 

described in § 686.12(b). 

■ 26. Section 686.41 is revised to read 

as follows: 

§ 686.41 Periods of suspension. 

(a)(1) A grant recipient who has 

completed or who has otherwise ceased 

enrollment in a TEACH Grant-eligible 

program for which he or she received 

TEACH Grant funds may request a 

suspension from the Secretary of the 

eight-year period for completion of the 

service obligation based on— 

(i) Enrollment in a program of study 

for which the recipient would be 

eligible for a TEACH Grant or in a 

program of study that has been 

determined by a State to satisfy the 

requirements for certification or 

licensure to teach in the State’s 

elementary or secondary schools; 

(ii) Receiving State-required 

instruction or otherwise fulfilling 

requirements for licensure to teach in a 

State’s elementary or secondary schools; 

(iii) A condition that is a qualifying 

reason for leave under the FMLA; 

(iv) A call to order to Federal or State 

active duty or Active Service as a 

member of a Reserve Component of the 

Armed Forces named in 10 U.S.C. 

10101, or service as a member of the 

National Guard on full-time National 

Guard duty, as defined in 10 U.S.C. 

101(d)(5); 

(v) Military orders for the recipient’s 

spouse for— 

(A) Deployment with a military unit 

or as an individual in support of a call 

to Federal or State Active Duty, or 

Active Service; or 

(B) A change of permanent duty 

station from a location in the 

continental United States to a location 

outside of the continental United States 

or from a location in a State to any 

location outside of that State; or 

(vi) Residing in or being employed in 

a federally declared major disaster area 

as defined in the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5122(2)). 

(2) A grant recipient may receive a 

suspension described in paragraphs 

(a)(1)(i) through (vi) of this section in 

one-year increments that— 

(i) Does not exceed a combined total 

of three years under paragraphs (a)(1)(i) 

through (iii) of this section; 

(ii) Does not exceed a total of three 

years under paragraph (a)(1)(iv) of this 

section; 

(iii) Does not exceed a total of three 

years under paragraph (a)(1)(v) of this 

section; or 


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Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 49827 

(iv) Does not exceed a total of three 

years under paragraph (a)(1)(vi) of this 

section. 

(b) A grant recipient, or his or her 

representative in the case of a grant 

recipient who qualifies under paragraph 

(a)(1)(iv) or (vi) of this section, must 

apply for a suspension on a form 

approved by the Secretary, prior to 

being subject to any of the conditions 

under § 686.43(a)(1) through (5) that 

would cause the TEACH Grant to 

convert to a Direct Unsubsidized Loan. 

(c) A grant recipient, or his or her 

representative in the case of a grant 

recipient who qualifies under paragraph 

(a)(1)(iv) or (vi) of this section, must 

provide the Secretary with 

documentation supporting the 

suspension request as well as current 

contact information including home 

address and telephone number. 

(d) On a case-by-case basis, the 

Secretary may grant a temporary 

suspension of the period for completing 

the service obligation if the Secretary 

determines that a grant recipient was 

unable to complete a full academic year 

of teaching or begin the next academic 

year of teaching due to exceptional 

circumstances significantly affecting the 

operation of the school or educational 

service agency where the grant recipient 

was employed or the grant recipient’s 

ability to teach. 

(e) The Secretary notifies the grant 

recipient regarding the outcome of the 

application for suspension. 

■ 27. Section 686.42 is amended: 

■ a. In the section heading by adding the 

words ‘‘or repay’’ after the word 

‘‘serve’’; 

■ b. In paragraphs (a)(1) introductory 

text and (a)(2), by adding the words ‘‘or 

repay’’ after the word ‘‘serve’’; 

■ c. By revising paragraph (b); and 

■ d. In paragraph (c)(4), by removing the 

words ‘‘and the Coast Guard’’ and 

adding in their place the words ‘‘the 

Coast Guard, a reserve component of the 

Armed Forces named in 10 U.S.C. 

10101, or the National Guard’’. 

The revision reads as follows: 

§ 686.42 Discharge of agreement to serve 

or repay. 

* * * * * 

(b) Total and permanent disability. (1) 

A grant recipient’s agreement to serve or 

repay is discharged if the recipient 

becomes totally and permanently 

disabled, as defined in 34 CFR 

685.102(b), and the grant recipient 

applies for and satisfies the eligibility 

requirements for a total and permanent 

disability discharge in accordance with 

34 CFR 685.213. 

(2) If at any time the Secretary 

determines that the grant recipient does 

not meet the requirements of the threeyear period following the discharge as 

described in 34 CFR 685.213(b)(7), the 

Secretary will notify the grant recipient 

that the grant recipient’s obligation to 

satisfy the terms of the agreement to 

serve or repay is reinstated. 

(3) The Secretary’s notification under 

paragraph (b)(2) of this section will— 

(i) Include the reason or reasons for 

reinstatement; 

(ii) Provide information on how the 

grant recipient may contact the 

Secretary if the grant recipient has 

questions about the reinstatement or 

believes that the agreement to serve or 

repay was reinstated based on incorrect 

information; and 

(iii) Inform the TEACH Grant 

recipient that he or she must satisfy the 

service obligation within the portion of 

the eight-year period that remained after 

the date of the discharge. 

(4) If the TEACH Grant made to a 

recipient whose TEACH Grant 

agreement to serve or repay is reinstated 

is later converted to a Direct 

Unsubsidized Loan, the recipient will 

not be required to pay interest that 

accrued on the TEACH Grant 

disbursements from the date the 

agreement to serve or repay was 

discharged until the date the agreement 

to serve or repay was reinstated. 

* * * * * 

■ 28. Section 686.43 is revised to read 

as follows: 

§ 686.43 Obligation to repay the grant. 

(a)(1) The TEACH Grant amounts 

disbursed to the recipient will be 

converted into a Direct Unsubsidized 

Loan, with interest accruing from the 

date that each grant disbursement was 

made and be collected by the Secretary 

in accordance with the relevant 

provisions of subpart A of 34 CFR part 

685 if— 

(i) The grant recipient, regardless of 

enrollment status, requests that the 

TEACH Grant be converted into a Direct 

Unsubsidized Loan because he or she 

has decided not to teach in a qualified 

school or educational service agency, or 

not to teach in a high-need field, or for 

any other reason; or 

(ii) The grant recipient does not begin 

or maintain qualified employment 

within the timeframe that would allow 

that individual to complete the service 

obligation within the number of years 

required under § 686.12. 

(2) At least annually during the 

service obligation period under 

§ 686.12, the Secretary notifies the grant 

recipient of— 

(i) The terms and conditions that the 

grant recipient must meet to satisfy the 

service obligation; 

(ii) The requirement for the grant 

recipient to provide to the Secretary, 

upon completion of each of the four 

required elementary or secondary 

academic years of teaching service, 

documentation of that teaching service 

on a form approved by the Secretary and 

certified by the chief administrative 

officer of the school or educational 

service agency in which the grant 

recipient taught and emphasizes the 

necessity to keep copies of this 

information and copies of the recipient’s 

own employment documentation; 

(iii) The service years completed and 

the remaining timeframe within which 

the grant recipient must complete the 

service obligation; 

(iv) The conditions under which the 

grant recipient may request a temporary 

suspension of the period for completing 

the service obligation; 

(v) The conditions as described under 

paragraph (a)(1) of this section under 

which the TEACH Grant amounts 

disbursed to the recipient will be 

converted into a Direct Unsubsidized 

Loan; 

(vi) The potential total interest 

accrued; 

(vii) The process by which the 

recipient may contact the Secretary to 

request reconsideration of the 

conversion, the deadline by which the 

grant recipient must submit the request 

for reconsideration, and a list of the 

specific documentation required by the 

Secretary to reconsider the conversion; 

and 

(viii) An explanation that to avoid 

further accrual of interest as described 

in § 686.12(b)(4)(ii), a grant recipient 

who decides not to teach in a qualified 

school or field, or who for any other 

reason no longer intends to satisfy the 

service obligation, may request that the 

Secretary convert his or her TEACH 

Grant to a Direct Unsubsidized Loan 

that the grant recipient may begin 

repaying immediately, instead of 

waiting for the TEACH Grant to be 

converted to a loan under the condition 

described in paragraph (a)(1)(ii) of this 

section. 

(3) On or about 90 days before the 

date that a grant recipient’s TEACH 

Grants would be converted to Direct 

Unsubsidized Loans in accordance with 

paragraph (a)(1)(ii) of this section, the 

Secretary notifies the grant recipient of 

the date by which the recipient must 

submit documentation showing that the 

recipient is satisfying the obligation. 

(4) If the TEACH Grant amounts 

disbursed to a recipient are converted to 

a Direct Unsubsidized Loan, the 

Secretary notifies the recipient of the 

conversion and offers conversion 

counseling as described in § 686.32(e). 


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49828 Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Rules and Regulations 

(5) Except as provided in paragraph 

(a)(8) of this section, if a grant 

recipient’s TEACH Grant was converted 

to a Direct Unsubsidized Loan, the 

Secretary will reconvert the loan to a 

TEACH Grant based on documentation 

provided by the recipient or in the 

Secretary’s records demonstrating that 

the recipient was satisfying the service 

obligation as described in § 686.12 or 

that the grant was converted to a loan 

in error. 

(6) If a grant recipient who requests 

reconsideration demonstrates to the 

satisfaction of the Secretary that a 

TEACH Grant was converted to a loan 

in error, the Secretary— 

(i) Reconverts the loan to a TEACH 

Grant; 

(ii) Applies any academic years of 

qualifying teaching service that the 

grant recipient completed before or 

during the period when the grant was 

incorrectly in loan status toward the 

grant recipient’s four-year service 

obligation requirement; 

(iii) Upon reconversion of the loan to 

a TEACH Grant, provides the grant 

recipient with an additional period of 

time, equal to eight years minus the 

number of full academic years of 

teaching that the recipient completed 

prior to the reconversion of the loan to 

a TEACH Grant, including any years of 

qualifying teaching completed during 

the period when the TEACH Grant was 

incorrectly in loan status, to complete 

the remaining portion of the service 

obligation. 

(iv) Ensures that the grant recipient 

receives credit for any payments that 

were made on the Direct Unsubsidized 

Loan that was reconverted to a TEACH 

Grant; 

(v) Notifies the recipient of the 

reconversion to a grant and explains 

that the recipient is once again 

responsible for meeting all requirements 

of the service obligation under § 686.12; 

and 

(vi) Requests deletion of any 

derogatory information reported to the 

consumer reporting agencies related to 

the grant while it was in loan status and 

furnishes a statement confirming that 

the grant was converted to a loan in 

error that the recipient may provide to 

creditors until the recipient’s credit 

history has been corrected. 

(7) If a grant recipient who requests 

reconsideration does not demonstrate to 

the satisfaction of the Secretary that a 

TEACH Grant was converted to a loan 

in error, the Secretary— 

(i) Notifies the recipient that the loan 

cannot be converted to a TEACH Grant; 

(ii) Explains the reason or reasons 

why the loan cannot be converted to a 

TEACH Grant; and 

(iii) Explains how the recipient may 

contact the Federal Student Aid 

Ombudsman if he or she continues to 

believe that the TEACH Grant was 

converted to a loan in error. 

(8) In the case of a grant recipient 

whose TEACH Grant was converted to 

a Direct Unsubsidized Loan in 

accordance with paragraph (a)(1)(i) of 

this section, the Secretary will reconvert 

the loan to a grant and restore the 

recipient’s service obligation if— 

(i) The grant recipient submits a 

request to the Secretary to reconvert the 

loan to a TEACH Grant; 

(ii) Excluding any periods of 

suspension granted under § 686.41, 

there is sufficient time remaining for the 

grant recipient to complete the required 

four academic years of qualifying 

teaching service within eight years from 

the date the grant recipient ceased 

enrollment at the institution where the 

recipient received the grant or, in the 

case of a student who received a TEACH 

Grant at one institution and 

subsequently transferred to another 

institution and enrolled in another 

TEACH Grant-eligible program, within 

eight years from the date the recipient 

ceased enrollment at the other 

institution; and 

(iii) In the case of a recipient who 

would not have sufficient time 

remaining to complete the service 

obligation within the eight-year period 

as described in paragraph (a)(8)(ii) of 

this section unless the recipient 

qualifies for a suspension under 

§ 686.40, which may be granted 

retroactively, the recipient requests and 

is determined to be eligible for the 

suspension. 

(9) A TEACH Grant recipient remains 

obligated to meet all requirements of the 

service obligation under § 686.12, even 

if the recipient does not receive the 

notices from the Secretary as described 

in paragraph (a)(2) of this section. 

(b) A TEACH Grant that is converted 

to a loan, and is treated as a Direct 

Unsubsidized Loan, is not counted 

against the grant recipient’s annual or 

aggregate loan limits under 34 CFR 

685.203. 

(c) A grant recipient whose TEACH 

Grant has been converted to a Direct 

Unsubsidized Loan— 

(1) Enters a six-month grace period 

prior to entering repayment, and 

(2) Is eligible for all of the benefits of 

the Direct Loan Program. 

PART 690—FEDERAL PELL GRANT 

PROGRAM 

■ 29. The authority citation for part 690 

continues to read as follows: 

Authority: 20 U.S.C. 1070a, 1070g, unless 

otherwise noted. 

§ 690.75 [Amended] 

■ 30. Section 690.75 is amended by 

removing paragraph (d). 

PART 692—LEVERAGING 

EDUCATIONAL ASSISTANCE 

PARTNERSHIP PROGRAM 

■ 31. The authority citation for part 692 

continues to read as follows: 

Authority: 20 U.S.C. 1070c–1070c–4, 

unless otherwise noted. 

■ 32. Section 692.30 is amended by 

revising paragraph (c)(5) to read as 

follows: 

§ 692.30 How does a State administer its 

community service-learning job program? 

* * * * * 

(c) * * * 

(5) Not involve the construction, 

operation, or maintenance of so much of 

any facility as is used or is to be used 

for sectarian instruction or as a place for 

religious worship; and 

* * * * * 

PART 694—GAINING EARLY 

AWARENESS AND READINESS FOR 

UNDERGRADUATE PROGRAMS 

(GEAR UP) 

■ 33. The authority citation for part 694 

continues to read as follows: 

Authority: 20 U.S.C. 1070a–21 to 1070a– 

28. 

■ 34. Section 694.6 is amended by: 

■ a. Revising paragraph (b); and 

■ b. Removing paragraph (c). 

The revision reads as follows: 

§ 694.6 Who may provide GEAR UP 

services to students attending private 

schools? 

* * * * * 

(b) When providing GEAR UP services 

to students attending private schools, 

the employee, individual, association, 

agency, or organization must be 

employed or contracted independently 

of the private school that the students 

attend, and of any other organization 

affiliated with the school, and that 

employment or contract must be under 

the control and supervision of the 

public agency. 

§ 694.10 [Amended] 

■ 35. Section 694.10 is amended in 

paragraph (b) by removing the words 

‘‘that is not pervasively sectarian’’. 

[FR Doc. 2020–14589 Filed 8–7–20; 4:15 pm] 

BILLING CODE 4000–01–P 


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