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: New 34 CFR §694.17 

Summary of issue: Section 404A(b)(3) of the HEA 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. Under 

previous regulations, the Secretary could choose to provide priority to applicants in 

Empowerment Zones or to Partnerships that award scholarships. 

Updated information since March 25-27 meeting: Negotiators reached tentative 

agreement on this issue. Slight editorial changes were made to the language. 

Tentative agreement: Yes

Change: 

§694.1517 What priorities does may the Secretary establish 

for a GEAR UP grant? 

For any fiscal year, tThe Ssecretary awards competitive 

preference priority points to an eligible applicant for a 

State grant that has both-- may select one or more of the 

following priorities:

 (a) Carried out a successful State GEAR UP grant 

prior to August 14, 2008 determined on the basis of data 

(including outcome data) submitted by the applicant as part 
2

of its annual and final performance reports, and the 

applicant’s history of compliance with applicable statutory 

and regulatory requirements; and Projects by Partnerships 

or States that serve a substantial number or percentage of 

students who reside, or attend a school, in an Empowerment 

Zone, including a Supplemental Empowerment Zone, or 

Enterprise Community designated by the U.S. Department of 

Housing and Urban Development or the U.S. Department of 

Agriculture.

 (b) Demonstrated commitment to early intervention,

leading to college access through collaboration and 

replication of successful strategies. Partnerships that 

establish or maintain a financial assistance program that 

awards scholarships to students, either in accordance with 

section 404E of the HEA, or in accordance with §694.11, to 

strengthen the early intervention component of its GEAR UP 

project.
3

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: 34 CFR §694.1

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 to States or Partnerships “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 since March 25-27 meeting: Negotiators reached tentative 

agreement not to regulate in this area. Negotiators also reached tentative agreement to 

provide express regulatory authority in Part 694 allowing the Secretary to establish a 

maximum Partnership award for each competition, as is currently done in competitions 

for State awards. The GEAR UP draft regulatory language provided for the second round 

of negotiated rulemaking was edited slightly to clarify that the maximum Partnership 

award for which an applicant can apply is the lesser of the maximum amount set by the 

Secretary or $800 per student. (In the previous version, both requirements were 

mentioned, but it was not specified how the requirements related to each other.) 

Tentative Agreement: Yes 

Change: 

§694.1 What is the maximum amount that the Secretary may 

award each fiscal year to a Partnership or a State under 

this program? 

 (a) Partnership grants. The Secretary may establish 

the maximum amount that may be awarded each fiscal year for 
4

a GEAR UP Partnership grant in a notice published in the 

Federal Register. The maximum amount for which a 

Partnership may apply that the Secretary may award each 

fiscal year for a GEAR UP Partnership grant is may not 

exceed the lesser of the maximum amount established by the 

Secretary or the amount calculated by multiplying--

 (1) $800; by 

 (2) The number of students the Partnership proposes 

to serve that year, as stated in the Partnership's plan. 

 (b) State grants. The Secretary establishes the 

maximum amount that may be awarded each fiscal year for a 

GEAR UP State grant in a notice published in the Federal 

Register. 
5

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: New 34 CFR §694.18 and §694.22

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 since March 25-27 meeting: As agreed at the February meeting, 

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 was 

signed into law). The draft regulations also respond to the negotiators’ suggestions 1) 

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, and 2) that 

grantees may serve students in high school (in addition to students in college) during the 

seventh year of the grant. 

As discussed by the Committee, the Department included in the draft regulation examples 

of services that can be provided to students in their first year of college. These examples 

are included in a separate section that addresses “permissible activities.” 

Tentative agreement: No

Change: 

§694.18 When may a GEAR UP grantee provide services to 

students attending an institution of higher education?

 (a) The Secretary authorizes an eligible State or

Partnership to provide GEAR UP services to students 
6

attending an institution of higher education if the State 

or Partnership--

 (1) Applies for and is awarded a new award after 

August 14, 2008 and 

 (2) In its application, requested a seventh year so 

that the State or Partnership may continue to provide 

services to students through their first year of attendance 

at an institution of higher education. 

 (b) A State grantee that uses a priority (rather than 

or in addition to a cohort) approach to identify 

participating students may, consistent with its approved 

application and at any time during the project period, 

provide services to students during their first year of 

attendance at an institution of higher education, provided 

that the grantee continues to provide all required early 

intervention services throughout the Federal budget period. 

 (c) If a grantee is awarded a seven year grant, 

consistent with the grantee’s approved application, during 

the seventh year of the grant the grantee--

 (1) Must provide services to students in their first 

year of attendance at an institution of higher education; 

and

 (2) May choose to provide services to high school 

students who have yet to graduate.
7

 (d) Grantees that continue to provide services to 

students through their first year of attendance at an 

institution of higher education must, to the extent 

practicable, coordinate with other academic support 

services to ensure that there is no duplication of service. 

* * * * * 

§694.22 What services may a GEAR UP project provide to

students in their first year at an institution of higher 

education? 

Consistent with their approved applications and §694.18, a 

grantee may provide any services to students in their first 

year of attendance at an institution of higher education

that will help those students succeed in school, and that 

do not duplicate services otherwise available to them. 

Examples of services that may be provided include-- 

 (a) Orientation services including introduction to 

on-campus services and resources;

 (b) On-going counseling to students either in person 

or though electronic or other means of correspondence;

 (c) Assistance with course selection for the second 

year of postsecondary education;
8

 (d) Assistance with choosing and declaring an 

academic major; 

 (e) Assistance regarding academic, social, and 

personal areas of need;

 (f) Referrals to providers of appropriate services; 

 (g) Tutoring and supplemental academic support; 

 (h) Assistance with financial planning;

 (i) Career counseling and advising services; or 

 (j) Advising students about transferring to other 

schools.

 

 
9

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: None

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 since the March 25-27 meeting: The Committee reached 

tentative agreement that the statute is clear on the new definition of “eligible entity” and 

that no regulations regarding this provision are necessary. 

Tentative agreement: Yes 

Change: None 
10

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 Committee reached tentative agreement on conforming 

changes to the regulations indicating that grantees must make substantial progress in 

meeting the matching percentage stated in their applications each year. (See § 694.7) 

Tentative agreement: Yes 

Change: 

§694.7 What are the matching requirements for a GEAR UP 

Partnership grant? 

 (a) In general. In order to be eligible for funding--

A Partnership must 

 (1) An applicant must Sstate in its application the 

percentage of the cost of the GEAR UP project the applicant

Partnership will provide for each year from non-Federal 
11

funds, subject to the requirements in paragraph (b) of this 

section; and 

 (2) A grantee must make substantial progress towards 

meeting the Comply with matching percentage stated in its 

approved application for each year of the project period.

 (b) Matching requirements. (1) Except as provided in 

paragraph (b)(2) of this section, §§694.8 and 694.9, the 

non-Federal share of the cost of the GEAR UP project must 

be not less than 50 percent of the total cost of the 

project (i.e., one dollar of non-Federal contributions for 

every one dollar of Federal funds obligated for the 

project) over the project period. 

 (2) A Partnership that has three or fewer 

institutions of higher education as members may provide 

less than 50 percent, but not less than 30 percent, of the 

total cost over the project period if it includes–-

 (i) A fiscal agent that is eligible to receive funds 

under Title V, or Part B of Title III, or section 316 or 

317 of the HEA, or a local educational agency; 

 (ii) Only participating schools with a 7th grade in 

which at least 75 percent of the students are eligible for 

free or reduced-price lunch under the National School Lunch 

Act; and
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 (iii) Only local educational agencies in which at 

least 50 percent of the students enrolled are eligible for 

free or reduced-price lunch under the National School Lunch 

Act.

 (3)(c) The non-Federal share of the cost of a GEAR UP 

project may be provided in cash or in-kind. 
13

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: New 34 CFR §694.8 and §694.9 

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

certain circumstances, modify the matching requirement applicable to a Partnership. The 

HEOA retains this provision, and also authorizes the Secretary to approve the following 

types of requests for reduction to the matching requirement: (1) requests made at the time 

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

precludes it from meeting the matching requirement, (2) requests from Partnership 

applicants to count contributions to scholarship funds established under section 404E of 

HEA 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 since the March 25-27 meeting: The Department proposes 

regulatory language that incorporates suggestions by non-Federal negotiators to 1) limit 

the waiver of the matching requirement to 50-75 percent of the requirement; 2) limit the 

period of the waiver to two years, unless the grantee reapplies for another waiver; and 3) 

create a multiple-tiered system for different types of waiver requests. 

The proposal would establish the following three new types of waivers: 

1) At the time of the application, the Secretary could waive up to 75 percent of the 

matching requirement for a period of up to two years for an economic hardship 

that stems from a specific exceptional or uncontrollable event (such as a natural 

disaster) that had a devastating effect on the members of the Partnership and the 

community in which the project would operate. This would be a one-time waiver 

that could not be renewed. Applicants seeking this type of waiver would need to 

have their proposed budgets reflect full matching contributions for years 3 

through 7 (or year 6 if they do not seek to provide services for students attending 

an Institution of Higher Education) of their grants. At the end of the waiver 

period, grantees that continue to experience problems meeting their matching 

requirement may qualify for a waiver under #3 of this numbered list. 

2) At the time of the application, the Secretary could waive up to 50 percent of the 

matching requirement for up to two years for other significant economic 
14

hardships. In determining whether an economic hardship is significant, the 

Secretary would consider a list of factors delineated in the regulations. 

In order to provide application opportunities for chronically distressed 

communities whose circumstances are unlikely to change over seven years, while 

at the same time ensuring that grantees continue to actively pursue match 

opportunities, the proposal includes a provision that the Secretary may tentatively 

approve a waiver of up to 50 percent of the matching requirement for up to the 

full seven years of the grant at the time of application. (Thus, allowing applicants 

to submit proposals with a reduced matching percentage proposed for every year 

of the grant.) However, to retain the waiver beyond two years, the grantee would 

need to submit documentation confirming that it continues to meet the factors 

upon which the waiver was granted and has tried unsuccessfully to obtain other 

sources of match. 

3) After a grant has been awarded, the Secretary could waive up to 50 percent of the 

matching requirement for a period of up to two years when the grantee 

demonstrates, based on a list of factors delineated in the regulation, that the 

sources of match identified in its application no longer exist and that it has 

exhausted other potential sources of match. 

The Department proposes to break the matching provisions into multiple sections to make 

them easier to follow. The Department also proposes to move the waiver provision in 

current §694.7 to new §694.8 and proposes slight modifications to the wording of this 

provision so that it aligns with the new waiver provisions in §§694.8 and 694.9. 

Tentative agreement: No

Change: 

§694.8 Under what conditions may the Secretary approve a 

request from a Partnership applying for a GEAR UP grant to 

waive a portion of the matching requirement?

 (a) The Secretary may approve a Partnership

applicant’s request for a waiver of up to 75 percent of the 

matching requirement for up to two years if the applicant 

demonstrates in its application evidence of a significant 

economic hardship that stems from a specific, exceptional,
15

or uncontrollable event, such as a natural disaster, that 

has a devastating effect on the members of the Partnership 

and the community in which the project would operate. 

 (b)(1) The Secretary may approve a Partnership

applicant’s request to waive up to 50 percent of the 

matching requirement for up to two years if the applicant 

demonstrates in its application that an on-going 

significant economic hardship precludes the applicant from 

meeting its matching requirement. 

 (2) In determining whether an applicant is 

experiencing an on-going economic hardship that is 

significant enough to justify a waiver under this 

paragraph, the Secretary considers documentation of such 

factors as:

 (i) Severe distress in the local economy of the 

community to be served by the grant (e.g., there are few 

employers in the local area or large employers have left 

the local area).

 (ii) Local unemployment rates that are higher than 

the national average.

 (iii) Low or decreasing revenues for State and County 

governments in the area to be served by the grant. 
16

 (iv) Significant reductions in the budgets of 

institutions of higher education that are participating in 

the grant. 

 (v) Other data that reflect a significant economic 

hardship for the geographical area served by the applicant. 

 (3) The Secretary may provide tentative approval of a 

request for a waiver under paragraph (1) for the remaining 

years of the project period. Grantees that receive 

tentative approval of a waiver for more than two years 

under this paragraph must submit documentation to the 

Secretary every two years by such time as the Secretary may 

direct that demonstrates that--

 (i) The significant economic hardship upon which the 

waiver was granted still exists; and 

 (ii) The grantee tried diligently, but unsuccessfully 

to obtain contributions needed to meet the matching 

requirement. 

 (c) The Secretary may approve a Partnership

applicant’s request in its application to match its 

contributions to its scholarship fund, established under 

section 404E of the HEA, on the basis of two non-Federal 

dollars for every one Federal dollar of GEAR UP funds.

 (d) The Secretary may approve a request by a 

Partnership applicant that has three or fewer institutions 
17

of higher education as members to waive up to 70 percent of 

the matching requirement if the Partnership applicant 

includes--

 (1) A fiscal agent that is eligible to receive funds 

under title V, or Part B of title III, or section 316 or 

317 of the HEA, or a local educational agency;

 (2) Only participating schools with a 7th grade 

cohort in which at least 75 percent of the students are 

eligible for free or reduced-price lunch under the National 

School Lunch Act; and

 (3) Only local educational agencies in which at least 

50 percent of the students enrolled are eligible for free 

or reduced-price lunch under the National School Lunch Act.

 

§694.9 Under what conditions may the Secretary approve a 

request from a Partnership that has received a GEAR UP 

grant to waive a portion of the matching requirement?

 (a) After a grant is awarded, the Secretary may 

approve a Partnership grantee’s written request for a 

waiver of up to--

 (1) 50 percent of the matching requirement for up to

two years if the grantee demonstrates that--
18

 (i) The matching contributions described for those 

two years in the grantee’s approved application are no 

longer available; and 

 (ii) The grantee has exhausted all funds and sources 

of potential contributions for replacing the matching 

funds. 

 (2) 75 percent of the matching requirement for up to 

two years if the grantee demonstrates that matching 

contributions from the original application are no longer 

available due to an uncontrollable event, such as a natural 

disaster, that has a devastating effect on members of the 

Partnership and the community in which the project would 

operate. 

 (b) In determining whether the grantee has exhausted 

all funds and sources of potential contributions for 

replacing matching funds, the Secretary considers the 

grantee’s documentation of key factors such as the 

following and their direct impact on the grantee:

 (1) A reduction of revenues for State and County 

governments. 

 (2) An increase in local unemployment rates. 

 (3) Significant reductions in the operating budgets 

of institutions of higher education that are participating 

in the grant. 
19

 (4) A reduction of business activity in the local 

area (e.g., large employers have left the local area). 

 (5) Other data that reflect a significant decrease in 

resources available to the grantee in the local 

geographical area served by the grantee. 

 (c) If a grantee has received one or more waivers 

under this section or under §694.8, the grantee may request 

an additional waiver of the matching requirement under this 

section no earlier than 60 days before the expiration of 

the grantee’s existing waiver. 

 (d) The Secretary may grant additional waiver 

requests for up to 50 percent of the matching requirement 

for a period of up to two years upon the expiration of any 

previous waivers. 
20

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: New 34 CFR §694.19, §694.20, 694.21 and §694.22

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: Non-Federal negotiators agreed that the lists of required and 

allowable activities should be included in the regulations. At the suggestion of one 

negotiator, the Department proposes to include this language in multiple sections to make 

it easier to follow. The Department also included clarification that career awareness 

activities should relate to rigorous academic curriculum. The Department proposes to use 

language describing required and permissible activities that is very close to the statutory 

language in order to ensure that we do not inadvertently make changes that bypass 

Congressional intent. 

Tentative agreement: No

Change: 

§694.19 What are required activities for GEAR UP projects?

A grantee must provide comprehensive mentoring, outreach, 

and supportive services to students participating in the 

GEAR UP program. These services must include the following 

activities: 

 (a) Providing information regarding financial aid for 

postsecondary education to participating students.
21

 (b) Encouraging student enrollment in rigorous and 

challenging curricula and coursework, in order to reduce 

the need for remedial coursework at the postsecondary 

level.

 (c) Implementing activities to improve the number of 

participating students who--

 (1) Obtain a secondary school diploma; and

 (2) Complete applications for, and enroll in, a 

program of postsecondary education.

 (d) In the case of State grants, providing

scholarships in accordance with section 404E of the HEA.

§694.20 What other activities may all GEAR UP projects

provide? 

A grantee may use grant funds to carry out the following 

services and activities: 

 (a) Providing tutors and mentors, who may include 

adults or former participants in a GEAR UP program, for 

eligible students. 

 (b) Conducting outreach activities to recruit 

priority students (identified in section 404D(d) of the 

HEA) to participate in program activities. 
22

 (c) Providing supportive services to eligible 

students. 

 (d) Supporting the development or implementation of 

rigorous academic curricula, which may include college 

preparatory, Advanced Placement, or International 

Baccalaureate programs, and providing participating 

students access to rigorous core academic courses that 

reflect challenging State academic standards.

 (e) Supporting dual or concurrent enrollment programs 

between the secondary school and institution of higher 

education partners of a GEAR UP Partnership. 

 (f) Providing activities that support participating 

students to--

 (1) Meet challenging State academic standards;

 (2) Successfully apply for postsecondary education;

 (3) Successfully apply for student financial aid; and

 (4) Develop graduation and career plans including 

career awareness and planning assistance as it relates to a 

rigorous academic curriculum. 

 (g) Providing special programs or tutoring in 

science, technology, engineering, or mathematics.

 (h) For Partnerships, providing support for 

scholarships described in section 404E of the HEA.
23

 (i) Introducing eligible students to institutions of 

higher education, through trips and school-based sessions.

 (j) Providing an intensive extended school day, 

school year, or summer program that offers--

 (1) Additional academic classes; or

 (2) Assistance with college admission applications.

 (k) Providing other activities designed to ensure 

secondary school completion and postsecondary education 

enrollment of at-risk children, such as:

 (1) Identification of at-risk children.

 (2) After-school and summer tutoring.

 (3) Assistance to at-risk children in obtaining 

summer jobs.

 (4) Academic counseling. 

 (5) Financial and economic literacy education or 

counseling.

 (6) Volunteer and parent involvement.

 (7) Encouraging former or current participants of a 

GEAR UP program to serve as peer counselors.

 (8) Skills assessments.

 (9) Personal and family counseling, and home visits.

 (10) Staff development.

 (11) Programs and activities that are specially 

designed for students who are limited English proficient.
24

 (l) Enabling eligible students to enroll in Advanced 

Placement or International Baccalaureate courses, or 

college entrance examination preparation courses.

 (m) Providing services to eligible students in the 

participating cohort through the first year of attendance 

at an institution of higher education.

 (n) Fostering and improving parent and family 

involvement in elementary and secondary education by 

promoting the advantages of a college education, and 

emphasizing academic admission requirements and the need to 

take college preparation courses, through parent engagement 

and leadership activities.

 (o) Disseminating information that promotes the 

importance of higher education, explains college 

preparation and admission requirements, and raises 

awareness of the resources and services provided by the 

eligible entities to eligible students, their families, and 

communities.

 (p) For a GEAR UP Partnership grant, in the event 

that matching funds described in the approved application

are no longer available, in a collaborative manner, 

providing matching resources and participating in other 

activities authorized under section 404D of the HEA.
25

§694.21 What additional activities are allowable for State 

GEAR UP projects?

 In addition to the required and permissible 

activities identified in §§694.19 and 694.20, a State may 

use grant funds to carry out one or more of the following 

services and activities: 

 (a) Providing technical assistance to--

 (1) Secondary schools that are located within the 

State; or 

 (2) Partnerships that are located within the State.

 (b) Providing professional development opportunities 

to individuals working with eligible cohorts of students.

 (c) Providing administrative support to help build 

the capacity of Partnerships to compete for and manage 

grants awarded under the GEAR UP program.

 (d) Providing strategies and activities that align 

efforts in the State to prepare eligible students to attend 

and succeed in postsecondary education, which may include 

the development of graduation and career plans.

 (e) Disseminating information on the use of 

scientifically valid research and best practices to improve 

services for eligible students.
26

 (f)(1) Disseminating information on effective 

coursework and support services that assist students in 

achieving the goals described in paragraph (f)(2)(ii) of 

this section, and

 (2) Identifying and disseminating information on best 

practices with respect to-- 

 (i) Increasing parental involvement; and

 (ii) Preparing students, including students with 

disabilities and students who are limited English 

proficient, to succeed academically in, and prepare 

financially for, postsecondary education.

 (g) Working to align State academic standards and 

curricula with the expectations of postsecondary 

institutions and employers.

 (h) Developing alternatives to traditional secondary 

school that give students a head start on attaining a 

recognized postsecondary credential (including an industryrecognized certificate, an apprenticeship, or an 

associate's or a bachelor's degree), including school 

designs that give students early exposure to college-level 

courses and experiences and allow students to earn 

transferable college credits or an associate's degree at 

the same time as a secondary school diploma.
27

 (i) Creating community college programs for students 

that are personalized drop-out recovery programs, and that 

allow drop-outs to complete a secondary school diploma and 

begin college-level work.

§694.22 What are permissible activities for GEAR UP 

projects that are serving students in their first year of 

attendance at an institution of higher education? 

 Consistent with its approved application and §694.18, 

a grantee may provide services to GEAR UP students in their 

first year of attendance at an institution of higher 

education, such as: 

 (a) Orientation services including introduction to 

on-campus services and resources;

 (b) On-going counseling to students either in person 

or though electronic or other means of correspondence;

 (c) Assistance with course selection for the second 

year of postsecondary education;

 (d) Assistance with choosing and declaring an 

academic major;

 (e) Assistance regarding academic, social, and 

personal areas of need;

 (f) Referrals to providers of appropriate services; 
28

 (g) Tutoring and supplemental academic support; 

 (h) Assistance with financial planning;

 (i) Career counseling and advising services; and 

 (j) Advising students about transferring to other 

schools.

 

 
29

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: New 34 CFR §694.12 and §694.13

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. The HEOA also requires grantees to provide 

information on the eligibility requirements for scholarships to all participating students 

upon the students’ entry into the GEAR UP program.

Updated information since March 25-27 meeting: Negotiators reached tentative 

agreement on this issue. (Negotiators also raised the possibility of adding a priority for 

States that propose to provide continuation scholarships to students in their sophomore 

through senior years of college. The Department did not propose to include such a 

priority because it would disadvantage States that receive a waiver of the scholarship 

provision.) 

The Department also clarified that although the HEOA no longer allows Partnerships to 

use Federal funds to provide scholarships that do not meet the requirements of section 

404E of the HEA, Partnerships may use non-Federal scholarship funds that do not meet 

the requirements of section 404E to comply with their matching requirements. 

Tentative agreement: Yes

Change: 

§694.1012 What are the requirements for awards under the 

program's scholarship component under section 404E of the 

HEA? 
30

 (a) Amount of scholarship. (1) Except as provided in 

paragraph (a)(2) of this section, tThe maximum scholarship

amount of a scholarship awarded that an eligible student 

may receive under section 404E of the HEA must be 

established by the grantee. at least the lesser of—

 (i) 75 percent of the average cost of attendance, as 

determined under section 472 of the HEA, for in-State 

students in 4-year programs of instruction at public 

institutions of higher education in the State; or

 (ii) The maximum Federal Pell Grant award funded for 

the award year in which the scholarship will be awarded.

 (2) The minimum scholarship amount that an eligible 

student receives for each fiscal year must not be less than 

the minimum Federal Pell Grant award under section 401 of 

the HEA at the time of award. 

 (2)(3) If an eligible student who is awarded a GEAR 

UP scholarship attends an institution of higher education

on a less than full-time basis during any award year, the 

State or Partnership awarding the GEAR UP scholarship may 

reduce the scholarship amount, but in no case may the 

percentage reduction in the scholarship be greater than the 

percentage reduction in tuition and fees charged to that 

student. 
31

 (b) Pell Grant recipient priority. A State, or a 

Partnership that chooses to participate in the scholarship 

component under section 404E of the HEA in its GEAR UP 

project--

 (1) Must award GEAR UP scholarships first to students 

who will receive, or are eligible to receive, a Federal 

Pell Grant during the award year in which the GEAR UP 

scholarship is being awarded and who are eligible for a 

GEAR UP scholarship under the eligibility requirements in 

section 404E(d) of the HEA; and

 (2) May, if GEAR UP scholarship funds remain after 

awarding scholarships to students under paragraph (b)(1) of 

this section, award GEAR UP scholarships to other eligible 

students (who will not receive a Federal Pell Grant) after 

considering the need of those students for GEAR UP 

scholarships.

 (b) For purposes of this section, an eligible student 

is a student who-- 

 (1) Is less than 22 years old at the time of award of 

the first GEAR UP scholarship;

 (2) Has received a secondary school diploma or its 

recognized equivalent on or after January 1, 1993;

 (3) Is enrolled or accepted for enrollment in a 

program of undergraduate instruction at an institution of 
32

higher education that is located within the State’s 

boundaries, except that, at the grantee’s option, an 

eligible entity may offer scholarships to students who 

attend institutions of higher education outside the State;

and

 (4) Has participated in the activities required under 

§694.19.

 (c) Cost of attendance. A GEAR UP scholarship, in 

combination with other student financial assistance awarded 

under any title IV HEA program and any other grant or 

scholarship assistance, may not exceed the student's cost 

of attendance.

 (c)(1) By the time students who have received 

services from a State grant have completed the twelfth 

grade, a State that has not received a waiver under section 

404E(b)(2) of the HEA of the requirement to spend at least 

fifty percent of its GEAR UP funds on scholarships must 

hold in reserve an amount that is not less than the minimum 

Federal Pell Grant multiplied by the number of students the 

State estimates will enroll in an institution of higher 

education. 

 (2) Consistent with paragraph (a) of this section 

and §694.14, States must use funds held in reserve to make 

scholarships to eligible students. 
33

 (d) States using a priority approach may award 

scholarships under paragraph (a) of this section to 

eligible students identified by priority at any time during 

the grant award period rather than reserving scholarship 

funds for use only in the seventh year of a project or

after the grant award period.

 (e) States providing scholarships must provide 

information on the eligibility requirements for the 

scholarships to all participating students upon the 

students’ entry into the GEAR UP program. 

 (f) A State must provide scholarship funds as 

described in this section to all eligible students who 

attend an institution of higher education in the State, and 

may provide these scholarship funds to eligible students

who attend institutions of higher education outside the 

State.

 (d)(g) Continuation scholarships. A State, or a 

Partnership that chooses to participate in the scholarship 

component in accordance with section 404E of the HEA in its 

GEAR UP project, may must award continuation scholarships 

in successive award years to each student who received an 

initial scholarship and who continues to be eligible for a 

scholarship is enrolled or accepted for enrollment in a 
34

program of undergraduate instruction at an institution of 

higher education. 

 (e)(h) Other grant assistance. A GEAR UP 

scholarship, provided under section 404E of the HEA, may 

not be considered in the determination of a student's 

eligibility for other grant assistance provided under title 

IV of the HEA, except that in no case shall the total 

amount of student financial assistance awarded to a student 

under title IV of the HEA exceed the student’s total cost 

of attendance. 

§694.1113 May a Partnership that does not award 

scholarships participate in the GEAR UP scholarship 

component under section 404E of the HEA provide, as part of 

a GEAR UP project, financial assistance for postsecondary 

education to students using non-Federal funds under the 

GEAR UP early intervention component? 

 

 A GEAR UP Partnership that does not participate in 

the GEAR UP scholarship component may provide financial 

assistance for postsecondary education, either with funds 

under this chapter, (Under Chapter 2 of subpart 2 of Part A 

of Title IV of the HEA,) or with non-Federal funds used to 

comply with the matching requirement. , to students who 
35

participate in the early intervention component of GEAR UP

if-- 

 (a) The financial assistance is directly related to, 

and in support of, other activities of the Partnership 

under the early intervention component of GEAR UP; and

 (b) It complies with the requirements in §694.10.
36

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: New 34 CFR §694.14

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 funds not used by eligible students within six years of their 

completion of high school to other eligible students. The HEOA 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 since the March 25-27 meeting: At the suggestion of one 

negotiator, the Department proposes to require the return of Federal funds within 45 days 

after the six-year period for expending funds expires. The 45-day period is consistent 

with other title IV programs. No other changes to this language are proposed. 

Tentative agreement: No 

Change: 

§694.14 What are the requirements for redistribution or 

return of scholarship funds not awarded to a project’s 

eligible students?

 (a) Scholarship funds held in reserve by States under 

§694.12(c) or by Partnerships under section 404D(b)(7) of 
37

the HEA that are not used by eligible students as defined 

in §694.12(b) within six years of the students’ scheduled 

completion of secondary school may be redistributed by the 

grantee to other eligible students. 

 (b) Any Federal scholarship funds that are not used 

by eligible students within six years of the students’

scheduled completion of secondary school, and are not 

redistributed by the grantee of other eligible students, 

must be returned to the Secretary within 45 days after the 

six-year period for expending the scholarship funds 

expires. 

 (c) Grantees that reserve funds for scholarships must 

annually furnish information, as the Secretary may require, 

on the amount of Federal and non-Federal funds reserved and 

held for GEAR UP scholarships and the disbursement of these 

scholarship funds to eligible students until these funds 

are fully expended or returned to the Secretary. 

 (d) A scholarship fund is subject to audit or 

monitoring by authorized representatives of the Secretary 

throughout the life of the fund.
38

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

Origin: HEOA Sec. 404(a)(2), (b), and (c) 

 

Issue: Continuity of Student Services

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

Regulatory cites: New 34 CFR §694.23

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 

cohort approach, 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 who are part of a cohort have completed 

high school. The HEOA requires eligible entities to provide services to these 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 since March 25-27 meeting: 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. At the request of a negotiator, the Department is 

proposing some minor wording changes to this language. 

Tentative agreement: No

Change: 

§694.23 Are GEAR UP grantees required to provide services 

to students who were served under a previous GEAR UP grant?

 If a Partnership or State grant using a cohort 

approach--
39

 (a) Ends before all students who received GEAR UP 

services under the grant have completed the twelfth grade, 

the grantee must continue to provide services required by

§§694.18 and 694.19 and authorized under §§694.20 and 

694.21 to those students who are enrolled in secondary 

schools until they complete the twelfth grade. After the 

grant ends, these services must be provided using nonFederal funds or Federal funds awarded in a subsequent GEAR 

UP competition.

 (b) Is awarded a GEAR UP grant on or after August 14, 

2008 and the grantee served students under a prior grant 

who remain enrolled in the secondary school, the grantee 

must continue to serve those students using Federal funds 

awarded for the new grant or the non-Federal matching 

contributions required under the new grant. 
40

Issue Paper 

Proposed Regulatory Language 

 Team IV – GEAR UP 

 

Issue: Updates/Conforming Changes

Regulatory cites: 34 CFR §694.4, §694.10, §694.11, §694.15, and §694.16

Summary of issue: The Department proposes the following updates/conforming 

changes to the regulations: 1) Several sections must be renumbered due to the addition of 

new sections; 2) Negotiators requested clarification that grantees could serve students at 

just one high school if the grantee is following a majority of the students; 3) The 

department proposes to delete a section of the regulations regarding the NEISP program 

because it is no longer relevant; and 4) The Department proposes to clarify that 21st

Century Scholarship Certificates should include information about GEAR UP 

scholarships, where applicable. 

Updated information since March 25-27 meeting: The following language was 

included in the draft regulatory package that was circulated to negotiators before the 

March 25-27 meeting. The Department received no comments on this language. 

Tentative agreement: No

Change: 

* * * * * 

§694.4 Which students must a State or Partnership serve 

when there are changes in the cohort? 

* * * 

 (b) (2) Must continue to provide GEAR UP services to 

at least those students in the cohort that who attend one 

or more participating schools that together enroll a 

substantial majority of the students in the cohort. 

* * * * * 
41

§694.810 What are the requirements that a Partnership must 

meet in designating a fiscal agent for its project under 

this program? 

* * * * * 

§694.911 What is the maximum indirect cost rate for an 

agency of a State or local government? 

* * * * * 

§694.14 What requirements apply to a State that served 

students under the National Early Intervention Scholarship 

and Partnership program (NEISP) and that receives a GEAR 

UP grant?

Any State that receives a grant under this part and that 

served students under the NEISP program on October 6, 1998 

must continue to provide services under this part to those 

students until they complete secondary school.

* * * * * 

§694.1215 How does a State determine which State agency 

will apply for, and administer, a State grant under this 

program? 

* * * * * 

§694.1316 What requirements must be met by a Partnership 

or State participating in GEAR UP with respect to 21st 

Century Scholarship Certificates? 
42

* * * 

 (b) 21st Century Scholarship Certificates must be 

personalized and indicate the amount of Federal financial 

aid for college and the estimated amount of any scholarship 

provided under section 404E of the HEA, if applicable, that 

a student may be eligible to receive.