1

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(a)(2) 

 

Issue: Priority 

Statutory cites: HEA Sec. 404A(b)(3) 

Regulatory cites: 34 CFR 694.15 

Summary of issue: Section 404A(b)(3) of the HEOA gives a priority in funding to 

entities that (1) have carried out successful GEAR UP programs prior to enactment of the 

HEOA, and (2) have a prior, demonstrated commitment to early intervention, leading to 

college access through collaboration and replication of successful strategies. This 

statutory provision also requires the Secretary to ensure that students served by GEAR 

UP programs prior to the enactment of the HEA continue to receive services through the 

completion of secondary school. Under previous regulations, the Secretary could choose 

to provide priority to applicants in Empowerment Zones or to partnerships that award 

scholarships. 

Updated information: In response to comments from the negotiators, the Department 

proposes regulatory language indicating that the Secretary will award priority points to an 

eligible applicant for a State grant that has carried out a successful GEAR UP grant and 

has demonstrated commitment to early intervention activities. The Secretary will 

determine whether a GEAR UP grant has been successful based upon data (including 

outcome data) submitted as part of the grantee’s annual and final performance reports and 

the grantee’s history of compliance with statutory and regulatory requirements. (See 

section 694.15) 

The Department determined, after a close reading of the statute, that Section 404A(b)(3) 

of the HEA requires the Secretary to ensure that students served by State grants before 

the enactment of the HEOA will continue to receive services, but does not provide 

priority to applicants serving those students. This issue is addressed in section 694.18. 
2

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(b)

 

Issue: Funding Rules

Statutory cites: HEA Section 404B(a) 

Regulatory cites: To be determined

Summary of issue: The HEOA requires the Secretary to award at least 33 percent of the 

GEAR UP appropriation to States; at least 33 percent to partnerships; and to award the 

remainder “taking into consideration the number, quality, and promise of applications for 

the grants” and, to the extent practicable, the geographic distribution of grants and the 

distribution of grants between urban and rural applicants. The HEA has always required 

the distribution of at least 33 percent of funds to States and to partnerships. The language 

regarding how the remaining funds are distributed is new. 

Updated information: At the last negotiation session, negotiators did not come to 

agreement on whether to regulate in this area, but several negotiators indicated that 

having a maximum partnership award instead of or in addition to regulations on this issue 

may improve the geographic distribution and urban/rural mix of grants. In response, the 

Department proposes to provide express regulatory authority in Part 694 for the Secretary 

to establish a maximum partnership award for each competition as is currently done in 

competitions for State awards. (See section 694.1) 
3

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(a)(2) 

 

Issue: Duration of awards

Statutory cites: HEA Sec. 404A(b)(2) 

Regulatory cites: 

Summary of issue: Previously, GEAR UP grants were awarded for a period of up to six 

years. The HEOA provides authority for grantees to apply for an optional seventh year of 

funding. The purpose of the new seventh year is to provide services at an institution of 

higher education to follow students through their first year of college attendance. 

Updated information: In response to tentative agreement reached by negotiators, the 

Department proposes to specify that the seventh year of funding is available only to 

grantees that applied for new awards after August 14, 2008 (the date the HEOA signed 

into law). The draft regulations also respond to the negotiators’ suggestion that States 

using a priority approach should have the option of providing services to students in their 

first year of college at any point during the life of the grant. 

The Department seeks further discussion on: 1) whether we should regulate on the types 

of services that should be provided during the seventh year and to whom they should be 

provided, 2) whether grantees should be required to serve a certain percentage of their 

students during the seventh year, 3) whether collaboration with other providers (such as 

TRIO grantees) should be required, and 4) whether grantees using a multiple cohort 

approach should be able to serve students in high school during the seventh year. (See 

new section 694.16) 
4

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(a)(3)

 

Issue: Revised Definition of Partnerships

Statutory cites: HEA Sec. 404A(c)(2) 

Regulatory cites: To be determined

Summary of issue: The HEOA changed the definition of an “eligible entity” to include 

a partnership consisting of 1) one or more local education agencies and 2) one or more 

degree granting institutions of higher education. Partnerships may include not less than 

two other community organizations or entities. A previous requirement that partnerships 

must include one or more elementary or secondary schools was eliminated. 

Updated information: The Department believes that the statute is clear on the new 

definition of “eligible entity” and does not believe that regulations regarding this 

provision are necessary. Non-federal negotiators appeared to agree. No new regulations 

are proposed. 
5

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404C(c)(3)

 

Issue: Changes to Matching Requirements

Statutory cites: HEA Sec. 404C(b) 

Regulatory cites: 34 CFR 694.7

Summary of issue: Generally, GEAR UP grantees are required to match one dollar of 

non-federal funds for every federal dollar awarded. The HEOA makes a number of 

changes to the GEAR UP matching requirement. Previously, grantees were expected to 

meet matching requirements each year. The HEOA provides that grantees can meet their 

matching requirements over the entire life of the grant if they make “substantial progress” 

in meeting the matching requirements each year. The HEOA also expands the types of 

contributions that can be considered part of the matching funds to include the costs of 

administering a scholarship program under the grant-funded project. 

Updated information: The Department proposes conforming changes to the regulations 

indicating that grantees must make substantial progress in meeting the matching 

percentage stated in their applications each year. (See section 694.7) 
6

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(c)(3)(C)

 

Issue: Waiver of Matching Requirements 

Statutory cites: HEA Sec. 404C(b)(2) 

Regulatory cites: 34 CFR 694.7(b)(2) 

Summary of issue: Under the HEA as previously authorized, the Secretary could, under 

certain circumstances, modify the percentage match requirement applicable to a 

partnership. The HEOA retains this provision, and also authorizes the Secretary to 

approve the following types of requests for reduction in match: (1) requests made at the 

time of an application, if the applicant demonstrates a significant economic hardship that 

precludes it from meeting the match requirement, (2) requests from partnership applicants 

to count contributions to scholarship funds established under section 404E on a two to 

one basis, or (3) requests made by a grantee demonstrating that the matching funds 

identified in an approved application are no longer available and the grantee has 

exhausted all reserves for replacing them. 

Updated information: The Department proposes conforming changes to implement this 

statutory provision, and seeks further comment on (1) the process it should use to 

consider requests for waivers, (2) the documentation that the Secretary should consider 

when reviewing requests for waivers, and (3) the definitions of “significant hardship” and 

“exhausted all revenues for replacing matching funds.” (See section 694.7) 
7

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(d) 

Issue: Required and Allowable Activities 

Statutory cites: HEA Sec. 404D 

Regulatory cites: To be determined

Summary of issue: The HEOA modifies the GEAR UP program by distinguishing 

between certain activities and services that projects must provide and optional activities 

that projects may offer. Prior to the new law, projects could choose from a number of 

allowable activities and services. 

Updated information: The Department believes that the statute is clear regarding 

required and allowable activities and does not believe that regulations regarding this 

provision are necessary. Non-federal negotiators appeared to agree, but there was interest 

in providing statutory information in the regulations. The Department seeks comment as 

to whether the statutory language should be copied into the regulations. (See new section 

694.17) 

 
8

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(e)

 

Issue: Scholarship Component/Funds Held in Reserve for 

Scholarships 

Statutory cites: HEA Sec. 404E 

Regulatory cites: 34 CFR 694.10

Summary of issue: The HEOA requires State grantees to hold in reserve funds for 

scholarships for eligible students in an amount that is not less than the minimum 

scholarship amount multiplied by the number of students that the State estimates will 

enroll in an institution of higher education. Grantees are also required by the HEOA to 

provide information on the eligibility requirements for scholarships to all participating 

students upon the students’ entry into the programs assisted under this chapter. 

Updated information: The Department proposes language indicating that by the time 

students served by a State grantee complete the 12th grade, grantees that have not 

received a waiver of the scholarship provision must hold in reserve an amount that is not 

less than the minimum Pell grant multiplied by the number of GEAR UP students that the 

State estimates will enroll in an institution of higher education. In response to requests 

by non-federal negotiators, the draft regulations specify that States can continue to award 

scholarships directly to students during the life of the grants. 

Negotiators also noted that the provisions of the HEOA appear to conflict as to whether 

scholarships must be portable (available to out-of-State students). (See sections 

404E(e)(2) and 404E(g)(3) of the HEA.) The Department agrees with the non-federal 

negotiators that the provision in section 404E(g)(3) clearly states that it is the State’s 

option as to whether to offer scholarships to students who attend institutions outside the 

state, and the draft regulatory language reflects that reading. 

The draft regulation also eliminates the former requirement that grantees provide 

continuation scholarships for each year that a student is in college and instead provides to 

grantees the option to provide continuation scholarships. The Department seeks further 

comments from negotiators regarding this proposed change. (See section 694.10) 
9

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(e)(5) 

 

Issue: Redistribution or Return of Unused Scholarship 

Funds/Reporting on Scholarship Monies after the Grant 

Period 

Statutory cites: HEA Sec. 404E(e)(4)(A) 

Regulatory cites: To be determined

Summary of issue: Previously, the HEA was silent as to the disposition of unused 

scholarship funds after the closure of a GEAR UP grant. The HEOA specifies that 

grantees may redistribute any unused funds not distributed to eligible students within six 

years of their completion of high school to other eligible students. The HEOA also 

requires State grantees to return to the Secretary any remaining scholarships funds to be 

redistributed by the Secretary to other grantees. 

In order for the Secretary to implement this provision, grantees may need to report on 

their scholarship funds after the completion of their grant award periods. At present, 

grantees have no accountability or reporting responsibilities to the federal government 

after the grants close. 

Updated information: The Department proposes a draft regulation that 1) requires 

grantees to return unused federal scholarship funds to the Secretary six years after 

students’ completion of high school and 2) requires grantees to report annually to the 

Secretary on the amount of funds reserved for GEAR UP scholarships and the 

disbursement of those funds. (See new section 694.12) 
10

 Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(b)(1) 

 

Issue: Continuity of Student Services

Statutory cites: HEA Sec. 404B(d)(1)(B) and (C); HEA Section 404A(b)(3)(B) 

Regulatory cites: To be determined

Summary of issue: The HEOA requires the Secretary to require eligible partnerships to 

continue to provide services to students who received services under a previous GEAR 

UP grant award but have not yet completed the 12th grade. Under the GEAR UP 

program, grantees may choose to add new cohorts (grade levels) of students each year of 

a grant and there is no minimum grade level at which services may begin. Accordingly, 

grants can end before students have completed high school. The HEOA requires eligible 

entities to provide services to those students through the 12th grade. Prior to the new law, 

there was no provision for grantees to serve students from a previous grant. 

Updated information: The Department proposes draft regulations that conform to the 

statute and indicate that grantees who receive funding after the passage of the HEOA 

must continue to serve students from a previous grant received by the grantee. The 

regulations also indicate that if a partnership or State grant using a cohort approach ends 

before all students have completed the 12th grade, the grantee must continue to provide 

services to the secondary students who have not yet completed 12th grade using either 

non-federal funds or federal funds awarded in a subsequent GEAR UP competition. 

Non-federal negotiators would like the Department to provide funding on a noncompetitive basis to former grantees to serve students in cohorts that have not completed 

the 12th grade. Because the Department does not have authority to award grants beyond 

six or seven years (see section 404A(b)(2) of the HEA), this suggestion was not adopted. 

(See new section 694.18)