Vol. 78 Wednesday, 

No. 15 January 23, 2013 

Part III 

Department of Education 

34 CFR Chapter VI 

Final Priorities; Gaining Early Awareness and Readiness for Undergraduate 

Programs (GEAR UP)—College Savings Account Research Demonstration 

Project; Final Rule 


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5036 Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 

DEPARTMENT OF EDUCATION 

34 CFR Chapter VI 

[CFDA Number: 84.334D.] 

Final Priorities; Gaining Early 

Awareness and Readiness for 

Undergraduate Programs (GEAR UP)— 

College Savings Account Research 

Demonstration Project 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Final priorities. 

SUMMARY: The Assistant Secretary for 

Postsecondary Education announces 

priorities under the GEAR UP College 

Savings Account Research 

Demonstration Project. The Assistant 

Secretary may use these priorities for 

competitions in fiscal year (FY) 2013 

and later years. We take this action to 

determine the effectiveness of 

implementing college savings accounts 

and providing financial counseling in 

conjunction with other GEAR UP 

activities as part of an overall college 

access and success strategy. 

DATES: Effective Date: These priorities 

are effective February 22, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Catherine St. Clair, U.S. Department of 

Education, 1990 K Street NW., room 

7056, Washington, DC 20006–8524. 

Telephone: (202) 502–7579 or by email: 

Catherine.StClair@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD) or a text 

telephone, call the Federal Relay 

Service, toll free, at 1–800–877–8339. 

SUPPLEMENTARY INFORMATION: 

Purpose of Program: The GEAR UP 

Program is a discretionary grant 

program that provides financial support 

for academic and related support 

services that eligible low-income 

students, including students with 

disabilities, need to enable them to 

obtain a secondary school diploma and 

prepare for and succeed in 

postsecondary education. 

Program Authority: 20 U.S.C. 1070a– 

21 to 1070a–28. 

We published a notice of proposed 

priorities (NPP) for this program in the 

Federal Register on June 1, 2012 (77 FR 

32612). That notice contained 

background information and our reasons 

for proposing the priorities. 

There are differences between the 

NPP and this notice of final priorities 

(NFP) as discussed in the Analysis of 

Comments and Changes section 

elsewhere in this notice. 

A summary of the major changes 

follows. 

• GEAR UP State grantees that 

received a new State grant in FY 2012 

and will have ninth grade students in 

the 2014–2015 academic year are 

eligible to apply for funding. 

• The Federal matching contribution 

has been changed from up to $10 per 

month to up to $25 per month for a 

maximum of $300 in Federal matching 

funds each year for a maximum of four 

years. 

• The funding eligibility criteria have 

been changed so that, to be eligible, a 

GEAR UP State grant funded in FY 2011 

or FY 2012 must support activities 

under this demonstration project in at 

least six high schools, each of which 

must serve a cohort of at least 30 ninth 

grade GEAR UP students. For the 

purposes of these priorities, a high 

school must serve students in grades 9– 

12. 

• Applicants must identify the 

names, locations, and National Center 

for Education Statistics (NCES) 

identification numbers of the GEAR UP 

high schools that the applicant proposes 

to participate in the demonstration 

project. 

• Project directors and appropriate 

project staff are required to participate 

in meetings that the Department will 

convene, likely in conjunction with the 

annual meetings of the National Council 

for Community and Education 

Partnerships (NCCEP), to provide 

professional development and technical 

assistance to grantees participating in 

the demonstration project. 

• In order to protect the integrity of 

the project evaluation, grantees may not 

solicit, or raise money from, nonFederal sources as additional 

contributions to the student’s nonFederal college savings account. 

Public Comment: In response to our 

invitation in the notice of proposed 

priorities, 19 parties submitted 

comments. 

Generally, we do not address 

technical and other minor changes, or 

suggested changes the law does not 

authorize us to make. In addition, we do 

not address general comments that 

raised concerns not directly related to 

the proposed priorities. 

Analysis of Comments and Changes: 

An analysis of the comments and of any 

changes in the priorities since 

publication of the notice of proposed 

priorities follows. 

Comment: Commenters were 

generally very supportive of the 

Department’s proposal. They offered 

various suggestions for improving the 

demonstration program, keeping in 

mind the Department’s desire to provide 

and promote incentives for greater 

college savings by families of GEAR UP 

students, keep administrative costs and 

effort manageable, provide flexibility 

where possible, and develop and 

implement a study design that would 

answer important questions about the 

usefulness of college savings accounts 

as a way to promote increased high 

school graduation rates and rates of 

enrollment in postsecondary education. 

Discussion: The Department 

appreciates these comments and is 

gratified that the commenters were 

generally very supportive of our 

proposal and the desirability of this 

special GEAR UP project. We address 

our responses to areas of specific 

commenter recommendations, by topic 

heading, in the following discussion. 

Changes: None. 

Costs, Training, and Support 

Comment: One commenter asked for 

clarification about whether, given the 

GEAR UP program’s match requirement, 

grantees would need to raise additional 

matching funds on top of the funds they 

must already raise to support their 

regular GEAR UP projects. The 

commenter stated that applicants need 

to know the extent of their financial 

commitment before they apply, and that 

unless these funds are needed to carry 

out the demonstration project, the 

Department should consider waiving 

the additional matching fund 

requirement. 

Another commenter also sought 

clarification about the requirement that 

grantees provide a matching 

contribution to the amount of the GEAR 

UP award for this demonstration 

project. 

Discussion: Under section 404C(b) of 

the HEA, successful GEAR UP 

applicants must provide from State, 

local, institutional, or private funds, not 

less than 50 percent of the cost of the 

program. The regulations at 34 CFR 

§ 694.7(a) and (b) further require that 

applicants must include in their budgets 

the percentage of costs of the GEAR UP 

project to be provided annually from 

non-Federal funds, and grantees must 

make substantial progress toward 

meeting the matching percentage stated 

in the approved application for each 

year of the project period. 

Successful applicants for the College 

Savings Account Research 

Demonstration Project must already be 

GEAR UP program State grantees, and 

the Department expects that most 

recipients of these demonstration grants 

will not have to provide additional 

matching funds beyond what they are 

already providing to meet the match for 

their initial GEAR UP award. This is 

because a grantee may count any ‘‘overmatched’’ non-Federal funds it has 

already committed to its regular GEAR 

UP project toward its match for the 


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demonstration project. Moreover, a 

grantee under this demonstration 

project may treat contributions of 

students, families, or others to a student 

savings account as a matching 

contribution in its project budget. If, 

however, during any project year these 

private contributions to savings 

accounts are less than anticipated, a 

State would have to ensure by the end 

of each project year that it had met the 

annual matching requirement through 

other non-Federal contributions to this 

project or to the regular GEAR UP 

activities. Thus, we anticipate that only 

those grantees that have not ‘‘overmatched’’ non-Federal funds in their 

regular GEAR UP projects or that do not 

secure sufficient non-Federal deposits 

in the students’ savings accounts will 

need to contribute non-Federal 

matching contributions to their College 

Savings Account Research 

Demonstration projects. 

Changes: We have added a clarifying 

citation to 34 CFR § 694.7 in Priority 2, 

section I, paragraph (n). 

Comment: One commenter 

recommended the use of online 

resources to facilitate the project. 

Discussion: The Department agrees 

that online resources are important for 

helping students and families manage 

their accounts. Under Priority 2, 

successful applicants must ensure that 

students, students’ parents, or others on 

the students’ behalf are able to make 

online deposits to accounts. In addition, 

students also must be able to view 

account balances online. While the 

Department believes that online 

resources could also be a very useful 

source of support for the required 

financial counseling or technical 

assistance and professional 

development for staff, we do not think 

it is appropriate to require online access 

for these purposes. Rather, grantees 

should have flexibility to take advantage 

of the resources that they believe are 

best suited for their projects. 

Changes: None. 

Comment: A commenter was 

concerned that the Background section 

of the notice of proposed priorities 

provided conflicting information about 

the amount of seed money that grantees 

will make available from GEAR UP 

funds for GEAR UP students. 

Discussion: We agree with this 

commenter that the Background section 

of the NPP should not have referred to 

an approximate amount of seed money. 

Changes: This notice of final priorities 

clarifies that the amount of seed money 

for a GEAR UP-funded account for each 

participating GEAR UP student is $200. 

The seed amount is set out in Priority 

2, Section I, paragraph (b)(1). 

Comment: A commenter suggested 

that the Department consider 

establishing basic design 

requirements—for both program 

management and evaluation purposes— 

for data and account management as 

most grantees will not have experience 

in the administration of these kinds of 

college savings accounts. The 

commenter also suggested that we 

provide grantees with data collection 

software and training on how to use it. 

Other commenters noted that it will be 

critical for grantees to receive guidance, 

technical assistance, and access to 

experts on establishing and maintaining 

these savings accounts, and on the 

responsibilities of trustees and 

custodians. 

Another commenter stated that the 

Department should be prepared to assist 

grantees in negotiating account features 

and contract terms with financial 

institution partners, and may even need 

to solicit financial institution partners 

for grantees. 

Another commenter stated that based 

on its experience with schools, local 

governments, and others in the design 

and development of college savings 

accounts, grantees will likely need 

significant technical support from the 

Department in various areas of their 

projects, particularly in the selection of 

savings accounts, program design, and 

program administration. 

Finally, noting that the Department 

had proposed that money families 

deposit into students’ college savings 

accounts would not count against their 

children for purposes of determining 

eligibility for Federal student financial 

assistance, one commenter 

recommended that we likewise ensure 

that these savings be excluded from 

other means-tested Federal programs, 

such as Medicaid and Temporary Aid to 

Needy Families. The commenter stated 

that if both the Federal-funds account 

and the student’s account are held in 

trust, the fact that the family does not 

have direct ownership of either should 

resolve the issue, but the commenter 

also noted that any hint of worry about 

this issue might create a chilling effect 

on deposit activity. The commenter 

recommended that the Department 

provide guidance to account 

administrators on how to address this 

issue of asset test at the Federal, State, 

and local levels and how to 

communicate the answers to students 

and families. 

Discussion: The Department agrees 

that extensive and ongoing technical 

assistance on important aspects of 

project implementation is crucial to 

helping grantees establish and manage 

savings accounts, and that this kind of 

support is particularly important for 

those with no experience in this area. 

To address these concerns, the 

Department plans to provide 

presentations and other technical 

assistance on important aspects of 

project implementation at national 

GEAR UP conferences. These activities 

would include general considerations 

that should be taken into account when 

implementing these types of savings 

accounts. The Department is also 

working with the Treasury Department, 

the National Credit Union 

Administration (NCUA), and the 

Federal Deposit Insurance Corporation 

(FDIC) to develop materials that will 

give applicants key information about 

implementing college savings accounts, 

including tax and asset test 

implications, such as those pertaining to 

Medicaid and Temporary Aid to Needy 

Families. However, grantees would 

tailor account characteristics to best 

meet their needs and the needs of their 

GEAR UP students, and would select 

their own financial partners, provided 

the requirements of Priority 2 are met. 

The Department would not participate 

in grantee (or applicant) discussions 

with financial institutions that would 

(or might) implement these savings 

accounts. With regard to the comment 

that the Department provide data 

collection software and training in its 

use, the Department may not endorse 

any specific data-collection software 

programs. Grantees should use their 

professional judgment in selecting 

appropriate software that meets their 

needs and the needs of the financial 

institutions with which they would 

partner. Grant funds may be used to 

purchase software and any needed 

training in its use for the purpose of 

providing and tracking demonstration 

project services and outcomes. 

Changes: None. 

Comment: One commenter wanted 

clarity on whether grantees may use 

grant funds for costs of programmatic 

support, given that certain supportive 

project activities, such as outreach and 

account administration, are labor 

intensive and particularly necessary at 

the local level. 

Discussion: The Department 

understands that college savings 

account programs can be labor intensive 

and require a significant investment in 

outreach and administration to be 

successful. In the proposed budgets they 

include in their project applications, 

applicants should include all expected 

costs of implementing the proposed 

projects, including provision of 

payment to the account administrator, 

the account trustee, and costs for 

managing and administering the project 


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over the course of the project period 

(and later if the grantee expects the 

account administrator to be conducting 

activities after the end of the project 

period). 

Changes: None. 

Comment: One commenter 

recommended that demonstration 

projects partner with local 

organizations, such as public 

broadcasting stations, to create highquality digital content and services on 

financial literacy. 

Another commenter said that the 

success of State GEAR UP grantees will 

require strong partnerships with local 

governments and school districts. 

One commenter recommended that 

the applications from State grantees 

include plans for local partnerships. 

This commenter noted that local 

partnerships can also help to tie this 

savings demonstration project to other 

community-based programs, such as 

free tax preparation, financial education 

resources, and help with the process of 

preparing a student’s FAFSA 

application. 

Discussion: The Department is 

currently working with the Treasury 

Department, the NCUA, the FDIC, and 

other Federal and non-Federal partners 

to identify other opportunities to 

provide grantees with technical 

assistance around financial literacy. 

Further, while we agree that grantees 

partnering with local organizations to 

create high-quality digital content can 

be very important for helping students 

and their families better understand 

financial literacy, we do not believe that 

requiring such a partnership is 

necessary. Grantees will be working 

with local educational agencies that 

already are implementing GEAR UP 

projects, and those GEAR UP grantees 

already engage in community 

partnerships that are key to the 

successful implementation of a GEAR 

UP project. We are confident that if a 

State GEAR UP grantee believes that a 

local partnership to develop digital 

materials would contribute to the 

success of this demonstration project, it 

will include this activity in its 

application. However, because we 

believe that applicants should design 

their applications using their best 

judgment of how best to achieve the 

goal of having the largest number of 

families of GEAR UP students make 

regular deposits in their children’s 

college savings accounts, we do not 

believe that requiring all grantees to 

partner with local organizations that can 

help to create high-quality digital 

content is either necessary or desirable. 

Changes: None. 

Comment: One commenter 

recommended the Department take 

specific actions to promote financial 

literacy, such as providing support to 

grantees to identify and select quality 

financial education curricula. 

Discussion: The Department will offer 

ongoing trainings to grantees that will 

include group format trainings (at 

annual GEAR UP conferences or via 

Webinar) and one-on-one advising, as 

needed. The Department is also holding 

discussions with Federal and nonFederal partners to identify other 

opportunities to provide support for 

grantees. This includes developing 

materials that will give applicants key 

information about implementing college 

savings accounts. The Department will 

also monitor financial education 

delivery over time to ensure quality. 

Changes: None. 

Funding Eligibility 

Comment: A number of commenters 

recommended that the Department 

expand eligibility so that the 

demonstration project may benefit 

priority students served in a State GEAR 

UP project as well as students who are 

in a cohort. 

One commenter noted that by limiting 

eligibility to State GEAR UP grantees 

that use the cohort approach, the 

Department is making ineligible many 

valuable, experienced, and interested 

stakeholders, including existing GEAR 

UP grantees, and it is limiting its ability 

to identify crucial barriers to 

implementation on a broader scale. 

A second commenter did not question 

our proposal that eligibility not extend 

to schools in which members of a GEAR 

UP cohort already are the beneficiaries 

of a matched college savings account 

program. Rather, it urged the 

Department to permit schools to be 

eligible if these college savings accounts 

were only made available in those 

schools to GEAR UP priority students 

who would not participate in this 

demonstration project. The commenter 

stated that one State would soon be 

implementing this kind of hybrid 

program and did not believe ineligible 

students under the State’s program 

should also be ineligible under this 

demonstration program. 

Another commenter recommended 

that eligibility be expanded to include 

both partnership and State GEAR UP 

grantees that meet all requirements of 

this competition. 

Discussion: We appreciate the broad 

interest in the project. While the 

Department agrees that both State and 

partnership grantees using the priority 

model for determining student 

eligibility are engaging in important and 

high-quality work, we have limited the 

pool of eligible grantees to State GEAR 

UP grantees that determine eligibility 

using the cohort approach for two 

reasons. 

First, permitting students who are 

selected for the regular GEAR UP project 

on the basis of priority to participate in 

this college savings account 

demonstration is incompatible with the 

project’s research design. In order to 

ensure that the potential effects of 

savings accounts are properly evaluated, 

grantees will need to serve entire 

cohorts (i.e., grades) of students in at 

least six GEAR UP high schools that (1) 

can be randomly assigned, and (2) have 

a sufficient number of GEAR UP 

participants in a ninth grade cohort 

whose progress and outcomes can be 

tracked over the grant period. We think 

that being able to evaluate the effects of 

savings accounts provided to all 

students in a cohort is important, 

because serving all students may create 

peer effects that indicate the importance 

of providing such accounts to every 

student, as opposed to a few individuals 

in a given school. Such a structure, 

however, necessitates that entire grades 

participate in the GEAR UP program, 

which is the case for a State grant that 

selects students using the cohort 

approach but not for grants that select 

students using the priority approach. 

Second, with regard to the comment 

that we extend eligibility to apply for a 

grant under this demonstration project 

to GEAR UP partnership grantees that 

select students using the cohort 

approach, we first note that under 

section 404D(a) and (b) of the HEA, 

GEAR UP funds may be used for 

scholarships and other financial 

assistance for participating students 

only as provided in section 404E of the 

HEA; therefore the use of GEAR UP 

funds for college savings accounts is 

permissible only as a supplement to the 

GEAR UP funds that a grantee is already 

reserving for financial assistance under 

section 404E in its regular GEAR UP 

project. Few GEAR UP partnership 

grantees reserve GEAR UP funds in their 

regular projects under requirements in 

section 404E. Furthermore, we believe 

State GEAR UP grantees, unlike the few 

partnership grantees that reserve GEAR 

UP funds for financial assistance under 

section 404E, have the needed capacity 

and infrastructure in place to manage 

this demonstration project. 

Changes: None. 

Comment: One commenter 

recommended maintaining the cohort 

approach, believing that ‘‘universality’’ 

is critical to creating a college-going 

culture. This commenter also expressed 

concern about precluding States and 


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municipalities with strong knowledge 

and experience in establishing student 

accounts from applying and 

recommended that the Department 

extend eligibility to States that are not 

now current GEAR UP grantees and to 

GEAR UP partnership grantees with 

strong municipal partners. 

Discussion: While the Department 

appreciates that a number of States and 

municipalities have been conducting 

some innovative and promising 

experiments on college savings, the 

Department needs to limit this 

competition to existing GEAR UP 

grantees. Under section 404C(a) of the 

HEA, the Department may provide 

GEAR UP funds only to applicants that 

submit an application to conduct the 

full panoply of GEAR UP activities 

required by law, and the Department 

does not have program funding 

available to support new GEAR UP 

grantees that would conduct all of these 

program activities and also implement 

this demonstration project. 

In addition, an important part of 

evaluating the effectiveness of college 

savings accounts is to do so in the 

context of wraparound services—that is, 

supports that combine academic 

activities like providing tutoring or 

encouragement to enroll in challenging 

coursework with mentoring, 

information on student financial aid, 

building family engagement, and other 

help that is not explicitly academic in 

nature. By providing grants to existing 

programs that have been operating for at 

least a year or two, we are ensuring that 

demonstration project grantees have had 

the time needed to put those 

wraparound services into place in a way 

that new grantees could not. 

Finally, we are not extending 

eligibility to local GEAR UP projects 

with strong municipal partners for the 

reasons expressed in response to the 

prior comment. 

Changes: None. 

Comment: One commenter requested 

that we clarify whether the 

demonstration project is open to all 

students in a cohort or only to those 

who are low-income and, if the latter, 

how income requirements would be set. 

Discussion: The demonstration 

project is open to any students in a 

GEAR UP cohort beginning in ninth 

grade, so long as they attend a school 

that has been randomly selected to 

receive seed and match funding for the 

college savings accounts. There are no 

additional tests for income or poverty 

beyond those in section 404B(d) of the 

HEA that apply to the schools in which 

the cohorts of students are enrolled and 

in which State GEAR UP grantees are 

already providing GEAR UP services. 

Changes: None. 

Comment: Several commenters 

requested that the Department expand 

grantee eligibility under Priority 1 to 

allow FY 2012 GEAR UP State grantees 

with ninth graders in the fall of the 

2014–2015 school year to participate in 

the demonstration project. These 

commenters stated that the 

Department’s proposal unnecessarily 

limits the pool of potential State GEAR 

UP grantees eligible to participate in 

this project. 

Discussion: We agree with these 

comments. Under Proposed Priority 1, 

GEAR UP State grantees that received a 

new award in FY 2012 and that select 

students on the basis of the cohort 

approach would not have been eligible 

to receive funding under this 

demonstration project because their 

students would predominantly be in the 

eighth grade during the 2013–2014 

academic year. However, we think it is 

appropriate to revise Priority 1 to permit 

GEAR UP State grantees that received 

new awards in 2012 and that are using 

the cohort approach to apply for 

funding under this demonstration 

project. Doing so will help to ensure 

that more State GEAR UP grantees are 

able to participate without undermining 

the evaluation of the demonstration 

project. 

Changes: Eligibility has been 

expanded to include 2012 GEAR UP 

State grantees that select participating 

students using the cohort approach and 

that provide GEAR UP services to ninth 

graders in the fall of the 2014–2015 

school year. 

Comment: Several commenters 

requested that the Department revise 

Priority 1 to lower the minimum class 

size of participating schools from the 

proposed 50 students in order to avoid 

bias against applicants serving rural 

schools. 

Discussion: The Department had 

initially proposed a class size of 50 to 

ensure that services are provided in a 

cost-effective manner and to provide a 

sufficient cushion so that even if some 

students and their families chose not to 

agree to participate in the surveys 

needed for the project evaluation, the 

evaluation would still have a 

sufficiently large sample of students and 

families. However, we agree with these 

comments that the proposed minimum 

class size of 50 students may have been 

unnecessarily high and would have 

made it difficult for many rural schools 

to participate even if their State is 

among the successful applicants. 

Historical data from State grantees 

indicate that high schools served by 

GEAR UP using the cohort approach 

have an average of far more than 30 

participants in the ninth grade cohorts. 

Using the lower number alleviates any 

potential rural bias but still ensures a 

sufficient number of GEAR UP students 

in each participating school both to 

enable cost-efficient administration of 

the demonstration activities and to 

sustain the integrity of the evaluation 

design. 

Changes: We have revised paragraph 

(a) in Section I of Priority 1 to state that 

when the applicant begins providing 

college savings accounts to its GEAR UP 

ninth grade students, each of the 

applicant’s participating schools must 

serve a cohort of a minimum of 30 ninth 

graders. 

Comment: One commenter noted the 

possibility that limiting applications to 

projects that select eligible GEAR UP 

students using the cohort approach 

could lead to overrepresentation of 

applications from certain geographic 

parts of the country. The commenter 

suggested that the Department consider 

having applicants identify their 

proposed projects as urban, rural, or 

suburban, and in the selection process 

give preference to applicants whose 

projects would serve urban and rural 

schools. 

Discussion: The Department agrees 

that the demonstration project should 

not unnecessarily disadvantage projects 

based upon the geographic location of 

their schools, particularly those serving 

schools in rural areas. That is why we 

are revising paragraph (a) in Section I of 

Priority 1 to specify that the applicant’s 

high schools must each serve a 

minimum ninth grade class-size of 30 

GEAR UP participants. Historical data 

from State GEAR UP grantees indicate 

that high schools using the cohort 

approach have an average of far more 

than 30 participants in the ninth grade 

cohorts. Therefore, we believe that 

reducing the minimum number of 

participants to 30 will be sufficient to 

address any concerns about geographic 

distribution and that no other actions 

are required. The Department believes 

that urban schools do not need special 

priority. As applicants for grants under 

this demonstration project are State 

GEAR UP grantees, the size of schools 

that a State identifies for inclusion in 

the proposed project should have no 

impact on the quality of the 

applications. Hence reducing the 

required size of the ninth grade cohort 

to 30 will not negatively impact larger 

urban schools. Moreover, these urban 

schools already make up a large portion 

of existing GEAR UP projects. Finally, 

the Department has found no correlation 

between a State GEAR UP grantee’s 

geographic location and its choice to 


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administer a cohort- or priority-based 

approach. 

Changes: We have revised paragraph 

(a) of Priority 1 to state that the schools 

that an applicant would serve must have 

at least 30 GEAR UP participants who 

will be in ninth grade during the 2013– 

2014 or 2014–2015 academic year 

(depending on whether they received 

their new GEAR UP award in FY 2011 

or FY 2012). 

Comment: One commenter 

recommended that the Department 

expand eligibility to include a GEAR UP 

State grantee initially funded in 2008, 

asserting that its State has had 

significant experience with college 

savings accounts since 2003 and has the 

Nation’s highest proportion of 

disadvantaged students. 

Another commenter recommended 

that the Department begin establishing 

the savings accounts and availability of 

match well before ninth grade for needy 

students whose parents are not college 

educated, given that these students 

would benefit from starting to save 

earlier in life. 

Discussion: The College Savings 

Accounts Research Demonstration 

Project is designed to study whether a 

combination of supported personal 

savings accounts and associated 

financial incentives and counseling 

provided during GEAR UP students’ 

high school years will have a positive 

effect on a variety of measures of college 

readiness, financial well-being, high 

school graduation, and college 

enrollment. GEAR UP students 

participating in a State grant funded in 

2008 would be in the twelfth grade at 

the start of the research study. 

Therefore, if we extended eligibility to 

include a GEAR UP State grantee 

initially funded in 2008, not only would 

GEAR UP funds provide these students 

with a very small amount of funding to 

be used for college expenses, but the 

research purpose of the demonstration 

project would not be realized. 

With respect to starting the 

demonstration project with students not 

yet in ninth grade, the Department 

recognizes that there may be some 

benefits to exploring the effectiveness of 

starting college savings earlier than 

ninth grade. However, one of the goals 

of the demonstration project is to look 

at the effects of college saving for a 

multiyear period while students are in 

high school. By starting with students in 

ninth grade cohorts, the Department can 

ensure that all students receiving 

college savings accounts will be 

attending high schools where they can 

receive the wraparound GEAR UP 

services that we think may be important 

for success in preparing them for, and 

promoting their enrollment in, college. 

By contrast, starting the demonstration 

projects when students are in an earlier 

grade could result in some students 

receiving valuable services while in 

middle school but then moving to high 

schools where they may not receive 

wraparound GEAR UP supports or the 

required financial counseling for the 

savings accounts. Moreover, in view of 

limitations on the amount of GEAR UP 

funds the Department has available to 

support this demonstration project, and 

our interest in receiving robust 

evaluation results earlier rather than 

later, we believe that beginning this 

demonstration project while students 

are in middle school would seriously 

undermine project results. 

Changes: None. 

Comment: One commenter 

recommended that any State-level 

project demonstrate clear and strong 

support of State political leadership, 

including the Governor, State treasurer, 

and school district leadership. The 

commenter stated that the 

demonstration projects would likely 

need cooperation among these offices 

for permissions and other data. The 

commenter further noted that State 

leadership would be particularly 

important if grantees used banks or 

credit unions rather than 529 college 

savings plans because individual banks 

and credit unions have their own 

account structures, unlike 529 plans. 

Discussion: The Department notes 

that, consistent with our proposal, 

paragraph (c) in Section II of Priority 2 

requires a letter of support from the 

LEAs that would participate in the 

project. The Department agrees that a 

broad demonstration of support for the 

project is important to help ensure its 

success. However, we think 

demonstrations of support are most 

important from the districts and schools 

that participate. They will have to work 

with grantees to give students 

wraparound services, provide financial 

literacy information, and help ensure 

that the account administrator and 

trustee have the data they need for 

deposits, withdrawals, and distribution 

of GEAR UP funds. By contrast, while 

we think that having the endorsements 

of a State’s political leadership could be 

helpful, projects can likely succeed 

without these endorsements, and 

requiring them would add additional, 

and we think unnecessary, burden to 

the application process. 

Changes: None. 

Comment: One commenter strongly 

recommended that students who enroll 

in GEAR UP schools in a grade whose 

cohort is served by a GEAR UP grant 

after the beginning of the demonstration 

project be allowed to participate and be 

given access to seeded savings accounts. 

The commenter stated that while 

researchers could track these students 

separately, the grantee should maintain 

a grade-level cohort. 

Discussion: In order to properly 

evaluate the effectiveness of the 

demonstration project, we need to start 

with a cohort of students in the ninth 

grade and then follow them throughout 

high school. Adding students who join 

the cohort after ninth grade would add 

costs to the project. And while the 

evaluation could separately track these 

students (with presumably smaller 

amounts of deposits in student 

accounts), doing so will add complexity 

to the evaluation. Therefore, we are not 

changing Priority 2 to require that 

grantees include in this project students 

who enter a participating school and 

join the cohort of GEAR UP students 

after the ninth grade. 

That said, we understand that 

prohibiting these students from 

receiving services and savings accounts 

provided through this project could be 

difficult to explain and could create 

very undesirable tensions in the school 

communities. For this reason, we 

believe that grantees should, if they 

desire, be able to establish accounts for 

students who join the grantees’ ninth 

grade cohort by enrolling after ninth 

grade in high schools in which cohort 

members have already received 

accounts. However, if a grantee chooses 

to provide savings accounts to these 

new members of the cohort, it must 

ensure that it has sufficient GEAR UP 

program funds to first provide matching 

deposits for students it is required to 

serve. 

Changes: We have added a new 

paragraph (f)(4) in Section I of Priority 

2 that, at the discretion of the grantee, 

permits students who become members 

of the GEAR UP cohort during the 

project period after transferring from a 

non-treatment high school into a 

treatment GEAR UP high school after 

ninth grade to have an account with the 

$200 seed money and availability of 

matching funds, provided that the 

grantee ensures that it has sufficient 

GEAR UP program funds to first provide 

matching deposits for students it is 

required to serve. 

Comment: None. 

Discussion: In Proposed Priority 1, the 

funding eligibility criteria would have 

required a GEAR UP State grant funded 

in FY 2011 or FY 2012 to support 

activities in ‘‘multiple’’ high schools. 

Through internal Department 

deliberation, we concluded that the 

term ‘‘multiple’’ was too vague and that 

the better approach is to specify a 


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precise minimum number. We chose to 

use six schools as the threshold because 

it represents the minimum number of 

participating schools in each SEA that 

will make the project cost-effective to 

implement and evaluate. 

Changes: We have revised paragraph 

(a) of Priority 1: Funding Eligibility to 

provide that an applicant must 

implement a GEAR UP project in ‘‘at 

least six high schools’’ rather than 

simply ‘‘multiple high schools.’’ 

Comment: None. 

Discussion: Proposed Priority 1 states 

that an applicant must have received a 

GEAR UP project grant that supports 

activities in ‘‘at least six high schools,’’ 

but does not define ‘‘high school’’ or 

what grade span would be considered 

‘‘high school.’’ Through internal 

Department deliberation, we concluded 

that it is necessary to clarify that, for the 

purposes of these priorities, a ‘‘high 

school’’ must be a school that serves 

students in grades 9–12. This 

clarification is needed first to ensure 

that grantees will be able to provide 

participating students with GEAR UP 

services for the entirety of the project. 

In addition, participating students in 

high schools that serve grades 9–12 will 

be able to receive the required financial 

counseling for four years in conjunction 

with their savings accounts. By serving 

students in the ninth grade who then 

may transfer to a non-GEAR UP high 

school for grades 10–12, many of these 

counseling benefits would be lost. 

Change: We have revised paragraph 

(a) of Priority 1: Funding Eligibility to 

provide a note clarifying that for the 

purposes of this notice of final 

priorities, a high school must be a 

school that serves students in grades 9– 

12. 

Savings Account Matching 

Contributions 

Comment: Several commenters 

requested that the Department revise 

Priority 2 and increase the proposed 

Federal matching contribution of $10 

per month so as to provide greater 

incentives for GEAR UP students to go 

on to college and for families to save for 

their children’s college expenses. 

One commenter recommended that 

between the $200 per student seed 

money and the GEAR UP matching 

funds, the total amount of possible 

Federal funds deposited into each 

account be a number that is easy for a 

family to remember, such as $1,500 or 

$2,000. 

Another commenter recommended 

that the Department provide flexibility 

in the amount of Federal matching 

funds that would be provided based on 

grantee determination of the needed 

family contribution. This commenter 

noted that having a variety of minimum 

matching rates would impact the 

evaluation but believes that the size of 

the treatment group should allow for 

such flexibility and help to answer the 

question of what level of match 

optimizes families’ savings 

contributions. Another commenter 

recommended that the Department not 

establish a monthly match based on a 

fixed amount of family savings but 

instead focus on regular savings 

because, according to the commenter, 

research suggests this approach would 

be more effective in promoting 

accumulated savings. 

Discussion: We agree with some of 

these comments. 

Having examined the level of GEAR 

UP program funding that we expect to 

be available for this demonstration 

project, we believe that we can offer 

greater financial incentives for GEAR 

UP students or their families to save 

money for postsecondary education 

than the $10 per month Federal match 

that we had proposed. We therefore are 

revising the priority to specify that 

grantees will be able to match up to $25 

per month. Thus, rather than the 

maximum of $120 of GEAR UP funds 

per year (and up to $480 over the 

maximum four years of savings) that we 

had proposed, grantees now will be able 

to provide each GEAR UP student a 

contribution of up to $300 per year (and 

up to $1,200 over this four-year period). 

The increase in the Federal matching 

contribution should increase the 

incentive for families to save for college 

and result in higher levels of family 

savings. We believe that $1,200 over 

four years will also give students and 

families a clearer amount of total seed 

and match funding available. While we 

appreciate one commenter’s suggestion 

that matching amounts vary based upon 

a determination of family need, we do 

not think this approach is appropriate 

here. Varying the match would increase 

complexity for administrators, who 

would have to develop a needs-analysis 

formula and find ways to communicate 

these differences to students and 

families clearly. Beyond having grantees 

make available this fixed amount, the 

Department believes that providing 

other options for families to receive 

further deposits of GEAR UP funds 

beyond those specified in Priority 2 

adds too much complexity to the 

administration of the project. 

Changes: We have revised paragraph 

(b)(2), of Section I of Priority 2: College 

Savings and Financial Counseling to 

increase the Federal matching 

contribution from up to $10 per month 

to up to $25 per month, for a maximum 

of $300 in Federal matching funds each 

year for four years. 

Comment: One commenter 

recommended the Department lower the 

match rate and raise the Federal 

matching contribution cap to maximize 

savings contributions. The commenter 

stated that families would be more 

motivated to save if the Department 

raised the amount of GEAR UP funds 

available for these savings accounts but 

lowered the match percentage from the 

50 percent that we had proposed. The 

commenter offered this approach, 

stating that it would increase the 

amount of funds families would have 

available for college savings without 

greatly increasing the level of 

commitment of GEAR UP funds. 

Discussion: The Department agrees 

with one of the recommendations in the 

comment. The match cap has been 

raised to $25 per month for a maximum 

of $300 in Federal matching funds each 

year for four years. The Department is 

not lowering the match rate, one dollar 

of GEAR UP contribution to the savings 

account for every dollar of student or 

family contribution, because we do not 

believe that lowering the match rate will 

result in increased non-Federal savings 

contributions. 

Changes: The Federal matching 

contribution cap has been increased to 

$25 per month. 

Comment: One commenter 

recommended revising the proposed 

priorities to allow grantees the option of 

matching family deposits in excess of 

the Federal limit, thereby providing an 

opportunity to leverage other incentive 

programs, such as savings match 

programs through a Section 529 plan. 

Discussion: While we agree that 

offering more matching funds would 

provide a greater incentive to save, the 

demonstration project is designed to 

determine the impact of a fairly specific 

set of college-savings-oriented services 

and the provision of a set amount of 

Federal funds as a match for private 

savings accounts. Grantees actively 

seeking to encourage additional family 

deposits in college savings accounts by 

offering a match against other nonFederal contributions will interfere with 

the project evaluation. Therefore, the 

amount of matching must be kept 

consistent for all participating GEAR UP 

grantees. 

Changes: None. 

Comment: One commenter 

recommended that the Department 

provide greater funding to accounts of 

families with fewer resources. The 

commenter noted that while this 

approach presents unique challenges, 

such as asking for a child’s Social 

Security number in order that the child 


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participates in the demonstration, this 

effort is needed if the demonstration is 

serious about policy influence. 

Discussion: The Department does not 

agree with the commenter. We believe 

that existing eligibility requirements of 

the GEAR UP program ensure that large 

numbers of participating students will 

be low-income and first-generation 

college students. Moreover, changing 

the amount of matching funding based 

upon additional factors will call into 

question the reliability of the results of 

the project, add complexity to 

administering the program, and make it 

harder to communicate to students and 

families about the level of available 

funding. Therefore, we want to offer a 

consistent level of seed and match 

funding for all participating students. 

Changes: None. 

Comment: One commenter asked that 

we clarify whether the family’s 

contribution to its college savings 

account must be made monthly in order 

to receive the full Federal contribution. 

Specifically, the commenter asked 

whether the project would contribute 

the full monthly level of matching 

contributions if the family had overmatched in one month and undermatched in another, but averaged at 

least $25 per month. The commenter 

also asked the Department to consider 

other savings models, such as 

permitting a family to receive the 

maximum amount of the GEAR UP 

contribution to the federally funded 

college savings account so long as it has 

made the required match at any point 

over this period. 

Discussion: A student or family that 

has over-matched its account in one 

month and under-matched in another 

would not be able to have the amount 

of its over-matches count for future 

monthly matches, including any catchup period contributions. One of the 

goals of the demonstration project is to 

encourage students and families to 

regularly save for college. Allowing the 

amount of over-matching in one month 

to count toward the matching amount in 

subsequent months would discourage 

regular saving and make the program 

more complex and costly to administer. 

The Department appreciates the 

comment that the match be available to 

families so long as the required 

contribution is made at any point over 

this period. While we think that families 

should have some flexibility and 

opportunities to make up for lost 

contributions, those opportunities 

should not be provided indefinitely. 

That is why we are requiring grantees to 

provide families a quarterly catch-up 

period of two weeks. We believe these 

frequent catch-up opportunities balance 

the desire to give families the 

opportunity to make up for missed 

contributions with a project goal of 

providing regular deadlines that 

encourage savings. 

Changes: Paragraph (p) in Section I of 

Priority 2 has been revised to clarify that 

a family that over-matches the Federal 

account in any month may not receive 

credit for the amount of over-match in 

any future month, including a catch-up 

period, for purposes of meeting that 

month’s GEAR UP program matching 

contribution. 

Comment: Rather than offer monthly 

matching contributions of GEAR UP 

funds, a number of commenters 

recommended that the Department 

instead add to accounts when certain 

levels of private savings are achieved, 

provide bonuses when families have 

added to accounts for perhaps six 

consecutive months, or, after making the 

initial deposit of GEAR UP funds, 

provide periodic deposits of Federal 

funds when students reach particular 

ages. One commenter said that these 

approaches would both be much 

simpler to implement than our proposal 

and that the latter option has proven 

successful in the United Kingdom. The 

commenter further recommended that 

rather than contributing Federal funds 

through matching, the Department 

should consider providing Federal 

funds for student accounts as behavioral 

incentives at certain milestones for 

financial or educational achievement. 

The commenter stated that this 

approach might be a more effective way 

to motivate student behavior and that 

research suggests that the approach also 

might better encourage long-term 

savings compared to matching monthly 

deposits. 

Discussion: While we appreciate the 

summary of research presented by the 

commenter, the Department does not 

agree that the proposed approaches are 

feasible for the purposes of this 

demonstration project. We think 

matching savings account contributions 

when they occur provides immediate 

positive feedback to students and 

families that will encourage additional 

saving. Moreover, we think that 

additional benefits, such as bonuses for 

repeatedly saving, will make accounts 

more complicated and costly to 

administer and harder for students and 

families to understand. As for providing 

matches based upon student age or 

other milestones, we think that 

including these other benefits would 

likewise make administering the 

accounts more complicated and make it 

too burdensome for grantees to manage 

them. Therefore, we are not including 

additional matches for meeting other 

milestones. 

Changes: None. 

Comment: One commenter 

recommended that grantees be able to 

raise funds for savings accounts from 

community and philanthropic 

organizations, but it cautioned that in 

this case there should be restrictions on 

the use of these funds for activities that 

are related to education or finance, and 

supported by adequate documentation. 

Discussion: Proper evaluation of the 

demonstration project requires that 

students served by all project grantees 

are subject to the same maximum 

matching and seeding amounts. Proper 

evaluation also requires that grantees 

not solicit or otherwise seek funds from 

sources other than the student’s family 

and friends to contribute to the 

student’s non-Federal account. Doing 

otherwise could compromise the 

demonstration project evaluation. 

Changes: Paragraph (c) in Section I of 

Priority 2 has been revised to clarify that 

a grantee may not solicit or raise money 

from non-Federal sources as additional 

contributions to the student’s nonFederal college savings account. 

Requirements for Savings Accounts 

Comment: Several commenters 

emphasized that, in order to meet the 

needs of their communities, the 

Department should allow grantees 

flexibility in the design of their 

programs and thus not require all 

grantees to use the same type of savings 

account. 

One commenter recommended that in 

providing such flexibility, the 

Department should require that all 

accounts have certain minimum 

qualities, such as making the accounts 

accessible, safe, and effective, avoiding 

excessive fees to students, and being 

easy to use. The commenter also stated 

that this approach allows for some 

uniformity while also providing 

variation for research purposes, and 

added that if the Department decides to 

require a single account type, it should 

not use 529 savings plans. The 

commenter stated that despite their 

positive features, these plans have more 

onerous data disclosure requirements 

than alternative account models and 

thus would exclude more students than 

necessary from participation. 

Another commenter, urging the 

Department to maintain flexibility in the 

type of account the applicant would 

select, noted that 529 plans generally 

cannot be accessed by deposits into 

local bank branches and may prove 

difficult to use by unbanked low-income 

households since in-person deposits 

would be very difficult. The commenter 


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noted that 529 accounts often have 

minimum deposit requirements, often in 

the $15 to $25 range, and require 

deposits to be made online or by mail; 

the commenter stated that these 

considerations would obstruct the use of 

these 529 accounts by many low-income 

families, particularly since the 

commenter’s experience is that the 

ability to make small cash deposits is 

very important for this population. 

On the other hand, a number of 

commenters recommended that we have 

grantees use existing 529 savings plans. 

One commenter noted that these plans 

provide a ready common infrastructure 

designed to support college savings that 

is not readily available in the case of 

banks or credit unions, that they would 

be available to students and parents 

after the end of this demonstration 

project, and that experience in one State 

demonstrates that use of a Section 529 

account by all participating students has 

made it possible to monitor savings 

patterns and performance very 

accurately. The commenter also noted 

that, for this demonstration project, 

these Section 529 savings plans would 

need to be flexibly implemented, and 

urged the Department to clarify that 

States may work with the 529 providers 

to craft special arrangements for account 

opening, account-holder information 

requirements, and account structure that 

are specific to the demonstration 

project. 

Finally, two organizations that work 

with members to enhance 529 plans 

submitted joint comments that, among 

other things, stated that the 2004 studies 

referenced in the NPP with regard to 

income bands and typical 529 plan 

participation are outdated and do not 

reflect efforts made in recent years to 

expand knowledge about and 

participation in 529 plans. In this 

regard, the commenters provided copies 

of two reports provided to the United 

States Treasury in February 2010 about 

529 plans and efforts of those 

implementing the plans to broaden their 

reach. 

The commenters also stated that 529 

plans do encourage savings by those 

with modest incomes and that virtually 

all of these plans have required 

contributions of as little as $10 to $25 

per month; have a wide variety of 

savings instruments, including very 

conservative ones; and low-fee options. 

The commenters said that they would 

defer to the State applicants about the 

specifics of implementing the 

Department’s proposed study and the 

logistics of funding of the GEAR UP 

supplementary college savings accounts 

with required criteria and 

characteristics, particularly privacy 

aspects, but asked the Department to 

remain open to allowing a variety of 

funding vehicles in the study. The 

commenters emphasized that the greater 

the flexibility that is available for 

implementation efforts, the greater the 

chances of success. The commenters 

also said that the State educational 

agency (SEA) in each State should work 

with the State’s 529 plan wherever 

possible, since by utilizing 529 plans for 

this purpose, it will take advantage of an 

existing infrastructure that administers 

college savings programs and in many 

instances administers a matching grant 

or other type of program for law and 

moderate income families. 

Discussion: We appreciate these 

comments, but we believe it is 

important to provide appropriate 

flexibility to grantees to choose the type 

of savings vehicle that works best for 

them and that they believe will work 

best for participating students and their 

families. As we proposed, the 

Department is providing each grantee 

flexibility to determine which type of 

savings program administration they 

will use, provided that the grantee 

ensures that: 

(a) It has a partnership with a 

financial institution that will provide 

GEAR UP students starting in ninth 

grade with an account that allows 

saving in a federally insured deposit 

account that accumulates interest, an 

account composed of U.S. Government 

Treasury securities, or a fully 

guaranteed savings option within a 

Section 529 college savings plan. 

Accounts may also provide students and 

families with investment options that 

present risks in exchange for the 

potential for larger returns but that are 

in no way guaranteed. 

(b) Federal funds are maintained in a 

single ‘‘notional’’ account that is in fact 

separate from any non-Federal funds. 

The amount of Federal GEAR UP seed 

and matching funds and accrued 

interest earned by each student is 

tracked, each student is permitted to see 

both the Federal funds and associated 

interest earned as well as any nonFederal funds and interest earned in a 

single account statement, and Federal 

funds are invested only in federally 

insured vehicles or U.S. Treasury 

securities. 

Even with these conditions, grantees 

will have many different types of 

accounts to choose from, such as 

501(c)(3) plans and 529 plans. 

With regard to the comment raising 

concerns about 529 plans, the 

Department believes that the 

requirements outlined in the priority 

will protect against those concerns such 

that plans that have the flaws the 

commenter identified would not meet 

the requirements for selection. 

Similarly, we are confident that these 

requirements do not preclude grantees 

from using 529 plans but instead 

provide grantees with sufficient 

flexibility to choose what works best for 

them. 

Changes: None. 

Comment: One commenter from an 

association of financial institutions 

offered to leverage its member bank and 

banking contacts to help identify 

institutions interested in participating 

in the project, should the Department 

select savings accounts as an eligible 

account type. 

Discussion: The Department 

appreciates the commenter’s interest in 

partnering with grantees to administer 

accounts. However, the Department 

thinks it is important that grantees have 

flexibility in selecting the provider that 

is best for them, and so we cannot 

recommend a specific type of account or 

provider. We do encourage the 

commenter to work with applicants and 

grantees to determine if their 

partnership would be appropriate. 

Changes: None. 

Comment: One commenter suggested 

that the Department allow for, and even 

encourage, maximum flexibility and 

experimentation across many of the 

dimensions of the accounts specified in 

Proposed Priority 2. 

Another commenter offered 

recommendations about the way the 

savings accounts should be set up, 

suggesting for example that (1) the basic 

savings accounts be interest bearing 

with no minimum balance and no fees, 

(2) parents be able to invest funds in a 

certificate of deposit or investment 

product such as a mutual fund, (3) 

accounts be in the student’s name so 

that assets in the accounts not affect 

family eligibility for Medicaid and 

Temporary Assistance for Needy 

Families (TANF), and (4) withdrawals 

for unauthorized purposes result in loss 

of GEAR UP matching funds. 

Another commenter stated that while 

flexibility was important, there are a 

number of advantages of structuring the 

saving accounts using a custodial or 

trustee model and holding all funds 

under a single tax identification 

number. These advantages include: 

accounts can be opened automatically 

and universally and without the need 

for Social Security number or parental 

consent, funds are protected from early 

or non-qualified withdrawals, account 

earnings accrue tax free without the 

need of parents to report these earnings, 

and assets are not held in a family’s 

name, thus avoiding asset tests for 

public benefits eligibility. 


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Yet another commenter recommended 

that the Department have grantees 

structure their accounts and projects so 

that (1) they are free of any fees on the 

students or the custodians, (2) all funds 

are insured by the FDIC, (3) there is no 

minimum balance or deposit amount, 

(4) parents and students have a range of 

deposit options, (5) there is strong 

competency in the management and 

exchange of data between the projects 

and financial institutions, (6) while 

making available limited withdrawals, 

families are provided access to their 

funds in the case of an emergency, and 

(7) families have access to account 

balances through an online system. 

Discussion: The Department 

acknowledges the recommendations 

received on the structure and 

implementation of the savings accounts. 

We agree that allowing grantees to tailor 

account characteristics to their preferred 

circumstances could have some 

benefits, and, as discussed previously, 

the Department has proposed to provide 

flexibility in choosing the type of 

savings account administration program 

provided certain core requirements are 

met. At the same time, we need to limit 

flexibility in other areas such as the 

amount of seeding or matching funds to 

ensure that the demonstration project is 

evaluating a specific set of college 

savings-oriented services. The 

responsibility for designing and 

managing these accounts, within the 

specified guidelines, rests with the State 

GEAR UP grantee. Successful applicants 

will propose an implementation plan 

that is most effective for their State and 

target population. 

Changes: None. 

Comment: A number of commenters 

recommended the elimination of the 

requirement that savings account 

administrators establish and maintain 

parallel accounts for each student, one 

for GEAR UP funds and the other for 

family contributions. 

One commenter stated that the family 

contributions should instead be held in 

sub-accounts of the single master 

account, meaning that there would be 

no need for parallel accounts since the 

Federal seed deposit and match funds 

could be accurately and easily tracked 

using a ledger system. 

Another commenter stated that while 

some college savings account programs 

use the dual-account approach the 

Department had proposed, others use 

software to track and accrue savings 

matches virtually while keeping the 

matching funds in a pooled account. 

Under this approach, when it is time for 

qualified withdrawals, the appropriate 

amount is withdrawn from the pool and 

paid to the institution of higher 

education or other vendor. The 

reduction in the number of separate 

accounts creates large decreases in 

administrative burden. 

Similarly, another commenter stated 

that to decrease administrative burden, 

the Department should make use of 

notional accounts in which the Federal 

funds would be placed in an account 

that is parallel to the account holding 

non-Federal funds. The commenter 

noted that while the Department might 

be legally required to use this 

arrangement, given the enormous 

number of potential savings accounts 

and the fact that it could not be a viable 

method of account delivery in the long 

term, the commenter urged the 

Department to use a single account 

design that would use software to track 

and account for Federal and nonFederal deposits. 

Discussion: We appreciate these 

comments. While we agree that 

eliminating the requirement for grantees 

to maintain parallel accounts for 

students would reduce by half the 

number of accounts, we think the 

provisions in Priority 2 that concern use 

of Federal dollars deposited into these 

accounts make parallel accounts 

preferable. In order to make sure Federal 

dollars are properly invested, they must 

be invested in federally insured vehicles 

or U.S. Treasury securities. Were we to 

require only a single account type, nonFederal matches would be restricted to 

similar investments, which would 

restrict savings options. Moreover, 

GEAR UP funds deposited into these 

accounts that are unused will need to be 

returned to the Department, something 

that would be very hard to manage with 

a single account for deposits of both 

Federal GEAR UP funds and private 

savings. Therefore, we think it is 

necessary that the two-fund structure be 

maintained. 

Changes: None. 

Comment: One commenter 

recommended establishing a process 

that allows for quick and easy deposit 

of funds to a student’s savings accounts. 

Another commenter recommended that 

the Department give priority to 

applicants that provide a convenient or 

automatic way for families to make 

deposits into students’ accounts, while 

another commenter provided research 

findings that automatic enrollment in a 

savings account yields much greater and 

sustained participation than having 

individuals open accounts on their own. 

However, another commenter stressed 

its concern that auto-enrollment without 

parental consent would be less effective 

for achieving both the needed parental 

buy-in to college savings and the 

student enthusiasm for college that 

would come from requiring parental 

engagement, such as a requirement that 

parents expressly ‘‘opt-in’’ to the 

project. And another commenter stated 

that while 529 accounts offer 

convenience and simplicity, requiring 

grantees to use these accounts may (1) 

lead to the removal of other attractive 

features of accounts, such as the need 

for families that already had savings 

accounts to open and add deposits to 

another, and (2) create much greater 

administrative burden that could 

dampen support by those administering 

the project. 

Discussion: The Department believes 

that making it easier for students to 

enroll in the savings accounts, 

particularly by doing so in an automatic 

or near-automatic fashion, is important 

for encouraging participation and 

savings. Therefore, we agree with 

commenters recommending easy 

enrollment and note that proposed 

Priority 2 allows quick and easy deposit 

of funds to a student’s savings account. 

Each successful applicant will be 

required to ensure that individual 

deposits can be made easily and at no 

cost to the student, the student’s 

parents, or others who make deposits on 

the student’s behalf. Consistent with the 

proposal, a student or parent would be 

able to deposit funds online, in person 

at convenient locations, or by mail. 

While the Department agrees that more 

engaged parents may be more likely to 

contribute to savings accounts and build 

enthusiasm for college, we think that 

requiring an express ‘‘opt-in’’ would 

make it more complicated to enroll and 

participate and could depress usage. 

Instead, we encourage grantees to work 

with families to build their interest and 

knowledge in the program, including 

through required financial counseling. 

Changes: None. 

Comment: One commenter 

recommended that the Department 

provide a strong preference for ensuring 

that grantees work with a single 

financial institution that can provide 

accounts with uniform terms and 

conditions, and at low cost, across the 

State. The commenter stated that such 

an approach would promote a better test 

of a college savings plan that included 

all students, would decrease 

administrative burden throughout the 

project, limit variability in savings 

accounts for administrative and 

evaluative purposes, and facilitate 

tracking and submission of more 

complete and accurate data about the 

projects. 

Discussion: We agree with much of 

this comment. With respect to requiring 

a single financial institution, we 

recognize that for many grantees a single 


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Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 5045 

partner may be sufficient and indeed 

even preferable to using multiple 

institutions. However, we also recognize 

that such a structure would not 

necessarily work in a larger State or in 

other circumstances. Therefore, we 

encourage grantees to use their 

professional judgment when 

determining how many financial 

partnerships they need to set up the 

college savings accounts for 

participating students in their States. 

Changes: None. 

Comment: One commenter 

recommended that the Department have 

grantees invite account personnel to 

attend regular meetings of parents at 

which they offer envelopes for mailing 

deposits and other ways to encourage 

savings. 

Discussion: While the Department 

thinks it is important that grantees have 

flexibility in deciding how counseling 

to parents should be provided, this 

requirement would not preclude 

account personnel from providing some 

or all of this assistance. 

Changes: None. 

Comment: While fully supporting the 

Department’s proposal to require that 

grantees provide families with 

automatic enrollment and 

encouragement of automatic savings 

deposits as useful design elements to 

encourage saving for a student’s college 

education, a commenter recommended 

that the Department also consider a 

number of other behavioral design 

elements. While these recommendations 

are addressed under the next topic 

headings, the commenter recommended 

that under Priority 2, the Department 

require each State grantee to secure 

technical assistance in designing 

behavioral interventions that suit the 

particular implementation of this 

project and that are customized to the 

operational constraints of the 

participating schools, account 

administrators, and the financial 

situation of participating students and 

their families. 

Discussion: The Department does not 

agree with this comment. Grantees may 

certainly design their projects to provide 

various approaches that they believe 

will be effective in encouraging families 

to focus on the importance of saving for 

college, and grantees may use GEAR UP 

funds to secure any desired technical 

assistance. However, while we 

appreciate that different behavioral 

designs may result in interesting 

variations in savings accounts, proper 

evaluation of the accounts requires 

consistent administration across 

grantees. Adding in such behavioral 

design elements would thus further 

complicate the evaluation and is not 

recommended. 

Changes: None. 

Financial Counseling and Behavioral 

Interventions 

Comment: One commenter 

recommended that the Financial 

Counseling component be given ‘‘the 

same weight’’ as the Student Savings 

Account component. We understand the 

commenter to be asking that the 

Department require grantees to 

implement both the Financial 

Counseling and Savings Account 

components of Priority 2. 

Discussion: The Department agrees 

with this comment and notes that, as 

proposed, Priority 2 requires grantees to 

implement both the Financial 

Counseling component and the Student 

Savings Account component. The 

College Savings Accounts Research 

Demonstration Project has two main 

parts: (1) establishing, operating, and 

having students participate in college 

savings accounts and financial 

counseling, and; (2) assessing the effect 

of providing the college savings 

accounts and related financial 

counseling to students and their 

parents. Both of these parts are in the 

absolute priority published in this 

notice of final priorities and 

incorporated by reference in the notice 

inviting applications for the College 

Savings Account Research 

Demonstration Project published 

elsewhere in this issue of the Federal 

Register. Therefore, successful 

applicants will need to address both the 

Financial Counseling and Student 

Savings Account components. 

Changes: None. 

Comment: One commenter expressed 

concern that students may be penalized 

when parents are unable or unwilling to 

attend required parent financial 

counseling sessions. The commenter 

recommended that counseling for 

parents be optional and that we provide 

incentives to parents who participate. 

Discussion: Grantees will be expected 

to find and utilize the most effective 

methods at participating schools for 

reaching out to and counseling parents. 

While grantees are required to provide 

‘‘at least biannual counseling meetings 

for parents,’’ they are not required under 

Priority 2 to meet specific attendance 

figures. Therefore, students whose 

parents do not attend the session will 

not be penalized. 

Changes: None. 

Comment: One commenter expressed 

concern that individually targeted 

financial counseling may be too 

burdensome for projects to implement 

successfully with existing resources. 

This commenter recommended 

partnering with outside organizations, 

such as Consumer Credit Counseling 

Services, to help provide such 

counseling. 

Discussion: We agree that grantees 

should make use of existing resources, 

both theirs and those of outside 

organizations, to provide financial 

counseling, and we encourage grantees 

to seek partners that can help them in 

this effort. However, we do not feel that 

it is necessary to include a statement to 

this effect in the final priority as 

applicants will no doubt craft a 

counseling plan that best meets their 

needs. 

The comment prompted us to 

examine paragraph (g) in Section I of 

Priority 2, which, as proposed, did not 

clarify whether all students in the 

treatment group need to participate in 

the required financial counseling. We 

have revised the provision to clarify that 

all students must be included. 

Changes: Paragraph (g) of Priority 2 

has been revised to clarify that all 

students in the treatment group must 

receive the required financial 

counseling. 

Comment: A commenter 

recommended adding a requirement 

that financial counseling, particularly 

for parents, be conducted in languages 

other than English, while another 

recommended that the Department 

encourage applicants to work with 

experienced partners in the delivery of 

culturally and linguistically appropriate 

financial education and counseling for 

parents and families. 

Another commenter, noting the 

importance of financial counseling, 

recommended that each State grantee 

implement financial counseling using 

curricula that are consistent and 

standardized across sites and that are 

focused on helping GEAR UP students 

to increase their savings. The 

commenter indicated that evaluation 

results with respect to the measure and 

impact of financial counseling would 

thereby be as valid and reliable as 

possible. In order to promote 

efficiencies and appropriate evaluation 

results, the commenter also emphasized 

the need of grantees, in States that 

mandate a financial education 

curriculum, to coordinate with that 

curriculum in the design phase of their 

projects. 

Discussion: While we recognize the 

need to provide linguistically and 

culturally appropriate financial 

counseling, we do not feel that it is 

necessary to require this for all 

participating projects. Grantees are 

expected to use their professional 

judgment and conduct teaching and 


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counseling that best meets the needs of 

parents and students, including those 

who need financial counseling in 

languages other than English. We have 

no doubt that in States that mandate a 

financial education curriculum, grantees 

will want to have participating schools 

and LEAs coordinate their financial 

counseling with this curriculum. 

However, we do not think it is 

appropriate to mandate that each 

grantee under this demonstration 

project use a particular curriculum that 

is consistent and standardized across 

school sites. 

Changes: None. 

Comment: One commenter 

recommended a change to Proposed 

Priority 2 to allow States to obtain 

technical assistance on the design of 

behavioral interventions that would 

help to encourage regular and greater 

savings for college, such as social 

support groups or the disbursement of 

matching funds through prizes that suit 

the particular implementation of the 

college savings accounts research 

demonstration project. 

Discussion: We agree with this 

recommendation but do not believe a 

change to Priority 2 is needed to 

accomplish the goal. The Department 

realizes there is an array of behavioral 

design interventions that may encourage 

regular deposits into savings accounts; 

we, therefore, encourage States to design 

their college savings account 

demonstration projects to include viable 

interventions that are likely to maximize 

college savings for students. 

Changes: None. 

Comment: One commenter 

recommended that, in order to better 

encourage parents to add deposits to 

their children’s college savings 

accounts, grantees should consider 

activities such as sending reminder 

letters and emails, preferably early in 

the month rather than at the end of the 

month; providing reminder magnets; 

and communicating to them what other 

families are doing or saying, e.g., the 

number of families that provided regular 

contributions in the preceding year or 

months. 

Discussion: We agree with the 

commenter that grantees should reach 

out to parents to provide them with 

reminders about saving. We believe, 

however, that States should be given 

flexibility to determine how this should 

be carried out. Therefore, we are not 

adding a specific requirement. 

Changes: None. 

Financial Education 

Comment: One commenter suggested 

that the Department encourage grantees 

to conduct financial education in 

multiple formats to ensure that the most 

effective method is used. The 

commenter also suggested that one of 

the required formats include classroom 

lessons during the school day, allowing 

GEAR UP to leverage the work of States 

that already mandate financial 

education in the schools. 

Another commenter emphasized that 

financial literacy and college savings 

accounts are not enough to overcome 

barriers, particularly for first-generation 

college students, in areas such as 

preparing for college academically and 

financially, how to apply to college, and 

how to choose the right college and 

career path. The commenter urged the 

Department to pursue high-impact 

mentoring, information about academic 

and career preparedness, and the 

engagement of parents, counselors, 

teachers, and other stakeholders as 

important interventions in addition to 

college savings accounts. The 

commenter urged the Department to 

address these interventions—including 

through use of the Internet and online 

tools—as well as college savings 

accounts in order to provide a more 

robust set of outcomes. 

Discussion: While we agree with the 

commenter that multiple educational 

formats may be more effective than a 

single format in reaching varied 

audiences with differing learning styles, 

we do not feel it necessary to mandate 

this practice. We believe that grantees 

will want to use educational formats 

that work best for their particular 

audience, relying on current and proven 

educational research. We also agree that 

the availability of savings accounts for 

GEAR UP students and promotion of 

financial literacy are likely insufficient 

by themselves to overcome all barriers. 

However, we note that all students 

participating in this program will also 

be receiving all regular GEAR UP 

services. By statute, GEAR UP grantees 

are required to provide participating 

students with a variety of mentoring, 

outreach, and supportive services (as 

referenced in the last sentence of 

paragraph (g) in Section I of Priority 2). 

These services will give students some 

of the mentoring and information 

assistance mentioned by the commenter, 

but we think much of what the 

commenter seeks requires a vehicle 

broader than this demonstration project. 

Changes: None. 

Comment: One commenter 

recommended that the Department help 

to prepare grantees to meet the financial 

education requirement by offering 

ongoing training to grantees, including 

one-on-one advising as needed; 

providing help to grantees to identify 

and select quality educational financial 

curricula; and monitoring financial 

education delivery over time. The 

commenter also recommended that the 

Department require financial education 

to be delivered in the classroom rather 

than after school and urged that it be 

coordinated with any financial 

education already required in grantees’ 

States. 

Noting the proposed requirement for 

individually targeted financially 

counseling, another commenter stated 

that many grantees would not have 

existing capacity to provide this higher 

intensity service and that this 

counseling would be very costly. The 

commenter urged the Department to 

invest additional resources in providing 

needed grantee training and to permit 

grantees to provide this counseling in 

partnership with outside organizations 

with the capacity to assist. 

Discussion: The Department agrees 

that extensive and ongoing technical 

assistance on important aspects of 

project implementation is crucial to 

helping grantees establish and manage 

savings accounts and that support is 

particularly important for those with no 

experience in this area. To address these 

concerns, the Department plans, among 

other things, to provide technical 

assistance training at national GEAR UP 

conferences on important aspects of 

project implementation. These aspects 

include general considerations that 

should be taken into account when 

implementing these types of savings 

accounts. The Department is also 

working with partners at the Treasury 

Department, the NCUA, and the FDIC to 

develop materials that will give 

applicants key information about the 

implementation of college savings 

accounts. 

While we appreciate the suggestion 

that the Department require grantees to 

provide financial counseling in the 

classroom rather than after school, we 

do not think it is appropriate to require 

this. Some schools may not be able to 

incorporate it into classroom time, and 

such a requirement could create 

problems with finding appropriate 

instructors. Likewise, we do not believe 

that an explicit requirement is necessary 

for coordinating with any financial 

education already required in grantees’ 

States. The Department notes that, in 

their applications under this 

demonstration project, potential 

grantees will describe project services 

that are most appropriate to the needs 

of the target population and that 

maximize the effectiveness of project 

services through the collaboration of 

appropriate partners. 

Changes: None. 


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Catch-Up Options 

Comment: A number of commenters 

recommended that the Department 

eliminate or reduce the catch-up period. 

One commenter stated that the proposed 

catch-up provision would add costs and 

complexity to the project and encourage 

delays in making deposits. Instead, the 

Department should consider requiring 

small regular deposits, which makes 

saving for college more manageable and 

ritualized. 

Another commenter recommended 

that we make this provision more 

flexible, both to reduce project 

complexity and to give students the 

greatest chance to acquire the maximum 

amount of Federal deposits. 

Discussion: The Department 

understands that lower- and moderateincome families sometimes have to 

make tough financial decisions that can 

seriously impede their ability to save for 

college regularly. We want to provide 

these families the flexibility to continue 

to receive matching funds by affording 

parents a two-week catch-up period. We 

think two weeks is an appropriate 

amount of time because it gives students 

and families ample opportunity to make 

catch-up contributions but does not 

provide so long a time period as to 

create a disincentive to make regular 

contributions to their children’s college 

savings accounts. 

Changes: None. 

Comment: One commenter 

recommended offering additional 

annual or four-year opportunities to 

catch up on required deposits. Another 

commenter recommended that we 

clarify the amount of catch-up that is 

needed when families have overmatched in certain months but undermatched in others. 

Discussion: The monthly savings 

component of the project is intended to 

instill a habit of consistent saving and 

methodical planning for education 

expenses. While we understand that 

family incomes may at times be 

inconsistent, this project aims to help 

encourage participants to regularly save 

money towards the costs of a college 

education. We are concerned that 

offering additional annual or four-year 

opportunities to catch-up will deter 

families from saving habitually. 

With regard to the request for 

clarification about a family that overmatched in any month, as we have 

expressed in response to a prior 

comment, we believe that given the 

project’s focus on promoting regular 

savings the amount of a family’s 

overmatch should not be available as a 

credit for a month in which the family 

did not meet its match amount. Thus, 

we also believe that the family should 

still need to provide catch-up 

contributions for any months in which 

it did not provide any contributions and 

that this should be the result regardless 

of how much a family over-matched in 

a given month. We have clarified 

Priority 2 in this regard. 

One of the goals of the demonstration 

project is to encourage students and 

families to regularly save for college. 

Allowing over-matching in one month 

to count in subsequent months would 

discourage regular saving and make the 

program more complex and costly to 

administer. 

Changes: Paragraph (p) in Section I of 

Priority 2 has been added to clarify that 

a family that over-matches the Federal 

account in any month may not receive 

credit for the amount of the over-match 

in any future month, including a catchup period, for purposes of meeting that 

month’s GEAR UP program matching 

contribution. 

Account Administrator 

Comment: One commenter sought 

clarity on the role of the account 

administrator. 

Discussion: Under Priority 2, each 

successful applicant must designate a 

savings account administrator to hold 

the account funds, accept deposits, and 

issue qualified withdrawals. The 

account administrator must be a 

federally regulated or State-regulated 

financial institution, such as an 

investment firm that manages a State’s 

529 plan or a federally insured bank or 

credit union that partners with the State 

to administer GEAR UP savings 

accounts. 

Changes: None. 

Comment: One commenter requested 

that we explain the difference between 

the account administrator and savings 

account trustee over the duration of the 

project and beyond the five-year grant 

period. The commenter also noted that 

students may hold their accounts for up 

to six years following high school 

graduation, meaning that the account 

administrators and trustees would need 

to serve the accounts (and presumably 

report data about them) for up to 11 

years. The commenter expressed 

concern that few potential account 

administrators and trustees will be 

willing to provide these services for this 

length of time, and that the 

administrative fees they are paid will 

last only five years. 

Discussion: Under Priority 2, each 

successful applicant must designate a 

savings account administrator and a 

savings account trustee. The savings 

account administrator is responsible for 

holding the account funds, accepting 

deposits, and issuing qualified 

withdrawals. The savings account 

trustee is responsible for managing the 

account funds and approving 

withdrawals and other account 

activities. 

The Department appreciates that 

accounts will have to be administered 

for a longer period of time than the 

grantee’s project period. But this 

extended timeframe is necessary to 

ensure that students are able to access 

their accounts throughout their time in 

postsecondary education. While we 

appreciate that this extended timeframe 

does place some burden on trustees and 

creates some uncertainty about how 

applicants and grantees would budget 

for these trustee costs, we think that the 

management of such accounts may 

become easier as families stop making 

contributions and instead begin 

withdrawing funds. In their applications 

under the program, potential grantees 

should budget up-front for all years for 

which the services of the account 

administrator and trustee will be 

needed. Moreover, grantees may budget 

for, and charge GEAR UP funds for, the 

reasonable and necessary costs of 

managing the savings accounts. Thus 

GEAR UP program funds will be 

available to pay the reasonable and 

necessary costs that the trustees can be 

expected to incur. 

Changes: None. 

Savings Account Ownership 

Comment: One commenter sought 

clarity on the ownership structure of the 

student savings accounts. The 

commenter stated that whether the 

account is owned by the trustee, the 

student, or the student’s family will 

affect account administration and 

families’ funding decisions. The 

commenter recommended that the 

trustee own both the student account 

and the match account. 

Discussion: The Department agrees 

with the commenter’s recommendation. 

Both the students’ account containing 

Federal funds and match account with 

non-Federal contributions will be 

owned by the account trustee. 

Participating GEAR UP students will be 

named as beneficiaries. This is the same 

structure banks use for minors’ savings 

accounts. 

Changes: None. 

Account Withdrawals 

Comment: One commenter sought 

clarification on what constitutes a 

‘‘qualified withdrawal.’’ The commenter 

asked, for example, whether the cost of 

an enrollment in preparatory course for 

a college entrance exam or the purchase 

of a computer would be a qualified 


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5048 Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 

withdrawal, or whether grantees may 

develop their own rules that align with 

the specific requirements of the account 

types they select. 

Another commenter recommended 

that the program follow the guidelines 

established by 529 programs for what 

constitutes a qualified withdrawal. Yet 

another commenter recommended that, 

to reduce administrative complexity, we 

eliminate provisions for reducing the 

prior match of GEAR UP funds for 

unqualified withdrawals from the 

student’s account. 

Another commenter urged the 

Department to consider reasonable 

restrictions on the purposes of 

withdrawals, perhaps with exceptions 

for emergencies, or limiting withdrawals 

to only a certain number of times per 

year. According to this commenter, 

surveys and focus groups of low-income 

individuals have suggested that these 

approaches may help encourage college 

savings. 

Discussion: Under Priority 2, students 

or their parents may withdraw Federal 

GEAR UP funds from the student 

savings accounts in which grantees have 

deposited them upon approval of the 

savings account trustee. Under 

paragraph (d) in Section I of Priority 2, 

withdrawals of GEAR UP funds may 

only be for qualified purposes, which 

are (1) funds provided to an institution 

of higher education on behalf of a 

student upon that student’s enrollment 

in an HEA title IV-eligible institution of 

higher education (which includes 

colleges and universities as defined by 

the HEA) for the purposes of paying for 

tuition, fees, course materials, living 

expenses, and other covered educational 

expenses as defined in the HEA, or (2) 

funds the student or parent need for 

such costs that would not be provided 

directly to the IHE. In addition, we have 

added to paragraph (d) permission to 

use funds in the Federal account for 

other costs related to postsecondary 

education that the account trustee, 

based on instructions from the grantee, 

determines to be appropriate. At the 

grantee’s discretion, these additional 

qualified purposes costs could include 

such items as the cost of enrollment in 

a preparatory course for a college 

entrance examination or the purchase of 

a computer required for college. 

Successful applicants also will 

establish rules for the withdrawal and 

transfer of non-Federal funds, which 

must include a requirement that the 

account trustee oversees any withdrawal 

or transfer of non-Federal funds. In 

terms of requests for additional 

restrictions on withdrawals or limiting 

the number of withdrawals allowed per 

year, the Department thinks that the 

restrictions placed on withdrawals of 

the Federal funds are appropriate. For 

the non-Federal matching funds, 

however, the Department does not think 

we need to establish additional 

restrictions since the loss of previously 

matched Federal funds that would 

accompany an unqualified withdrawal 

should be sufficient to dissuade this 

from often occurring. If, however, States 

wish to provide additional restrictions 

on withdrawing funds from the 

student’s non-Federal college savings 

account, that is their purview. 

Changes: None. 

Comment: One commenter noted that 

the Department had proposed that the 

college savings accounts be held for the 

GEAR UP students in trust pending 

their graduation from high school and 

enrollment ‘‘in a college or university,’’ 

and asked what we mean by a ‘‘college 

or university.’’ The commenter asked 

whether the phrase is limited to 

accredited institutions, and whether 

technical schools such as culinary 

institutes, automotive schools, or 

cosmetology schools would qualify. 

Discussion: By ‘‘college or 

university,’’ the Department means an 

institution of higher education that 

participates in the Title IV Student 

Financial Assistance programs and is 

described in section 102 of the HEA. 

This interpretation is necessary because 

GEAR UP funds may only be used for 

college savings accounts as a 

supplement to financial assistance that 

GEAR UP grantees are already provided 

as scholarships and student financial 

assistance under section 404E of the 

HEA. Section 404E provides that to 

receive this assistance students must be 

enrolled in such an institution of higher 

education. 

Changes: We have added language to 

paragraph (d) in Section I of Priority 2 

to clarify that GEAR UP funds deposited 

into the college savings account and 

used for the costs associated with 

postsecondary education must be used 

for costs associated with enrollment at 

an institution of higher education, as the 

term is defined in section 102 of the 

HEA. 

Data Collection and Evaluation 

Comment: A commenter agreed with 

the Department’s proposal to avoid 

collecting Social Security Numbers 

(SSNs) and taxpayer identification 

numbers (TINs). The commenter noted 

that many schools are not allowed to 

collect or disclose such personally 

identifiable information about their 

students, and yet many institutions, 

including 529 plans, require all account 

holders to provide this information. The 

commenter also identified locations that 

it stated were able to implement college 

savings accounts without SSNs or TINs. 

Finally, because of what the commenter 

viewed as ‘‘Know Your Customer’’ 

provisions of the Patriot Act and Bank 

Secrecy Act, the commenter urged the 

Department, perhaps together with other 

entities or experts in this area, to advise 

on the propriety of opening accounts 

without SSNs and TINs. 

Discussion: The Department 

encourages grantees to avoid collecting 

SSNs or TINs when it is feasible to do 

so. For example, we note that some 

financial institutions may accommodate 

the use of unique identifiers for students 

in lieu of SSNs or TINs. However, we 

acknowledge that some financial 

institutions may require personally 

identifiable information for the 

purposes of managing accounts. The 

Department does not prohibit grantees 

from collecting this information in the 

event that doing so is necessary in a 

given State. We expect to provide 

technical assistance to grantees on this 

topic, including any implications that 

collecting this personal identifiable 

information may have under Federal 

privacy laws. 

Changes: None. 

Comment: One commenter urged the 

Department to design, write code, and 

implement common account monitoring 

standards across the full demonstration 

project since, according to the 

commenter, without such a 

comprehensive design plan, there is a 

substantial risk of substantial data 

failure on savings patterns and 

performance. We read the comment to 

be concerned, in part, with the quality 

of data that grantees would need to 

provide for the project evaluation. 

Discussion: While those preparing the 

Department’s evaluation of this 

demonstration project will review 

comments on the account monitoring 

standards, the specific data items and 

data collection structure to be used in 

the Department’s evaluation were not 

part of the notice of proposed priorities 

and are not subject to public comment. 

Changes: None. 

Comment: A number of commenters 

recommended approaches for the design 

of the Department’s evaluation of this 

demonstration project. Among other 

things, commenters recommended that 

the evaluation collect and analyze 

differences in GEAR UP services across 

schools, family financial stability data 

and the different types of financial 

counseling provided by grantees and 

their relationship to impacts. The 

commenters also recommended that the 

evaluation use statistical techniques to 

account for school-level clustering of 

students in the analysis. 


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Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 5049 

Discussion: While those preparing the 

Department’s evaluation of this 

demonstration project will review 

comments on the research design, the 

specific data items and statistical 

analyses to be used in the Department’s 

evaluation were not part of the notice of 

proposed priorities and are not subject 

to public comment. 

We note, however, that the 

Department intends that the evaluation 

will address, to the extent possible, the 

ways in which both regular and 

demonstration GEAR UP services are 

implemented across schools. We also 

intend to collect some information 

about income and assets through parent 

surveys conducted in spring 2014 and 

2016. However, we do not believe that 

we can adequately address family 

financial stability and how that might 

relate to the timing and levels of 

contributions to savings accounts 

without more frequent and longer 

surveys that would be burdensome to 

parents and costly for the evaluation to 

implement. Finally, the Department 

plans for the evaluation to appropriately 

adjust for clustering of students within 

schools in performing the statistical 

analysis of impacts. 

Changes: None. 

Grantee Attendance at Project Meetings 

Comment: None. 

Discussion: Paragraph (h) in Section I 

of Proposed Priority 2 required the 

grantee’s project director to attend one 

particular meeting held by the 

Department. We have revised this 

paragraph to provide more details and 

require attendance at multiple 

Department meetings, likely held in 

conjunction with the annual meetings of 

the National Council for Community 

and Education Partnerships (NCCEP), 

where technical assistance will be 

provided. We made these changes to 

ensure that we provide sufficient 

technical assistance to grantees and to 

allow grantees to be better prepared to 

attend these meetings. 

Changes: Paragraph (h) in Section I of 

Priority 2 has been revised to state that 

project directors, site coordinators, and 

other appropriate project staff are 

required to participate in meetings of 

GEAR UP grantees that the Department 

will convene to provide professional 

development and technical assistance to 

grantees participating in the 

demonstration project. 

Final Priorities: The Assistant 

Secretary for Postsecondary Education 

establishes these priorities to determine 

the effectiveness of implementing 

college savings accounts and providing 

financial counseling in conjunction 

with other GEAR UP activities as part of 

an overall college access and success 

strategy. 

Priority 1: Funding Eligibility. 

To meet this priority, an applicant 

must— 

(a) Have received a new GEAR UP 

State grant in FY 2011 or FY 2012 that 

supports activities in at least six high 

schools, each of which must serve a 

cohort of at least 30 GEAR UP 

participants who will be in ninth grade 

during the 2013–2014 academic year 

(for recipients of FY 2011 grants) or 

2014–2015 academic year (for recipients 

of FY 2012 grants); 

For the purposes of this priority, 

‘‘high school’’ means a school that 

serves students in grades 9–12. 

(b) Use the cohort approach (see 

Section 404B(d)(1) of the Higher 

Education Act (HEA)) to select 

participating GEAR UP students; and 

(c) Identify in its application the 

names, locations, and National Center 

for Education Statistics (NCES) 

identification numbers of the GEAR UP 

high schools expected to participate in 

the demonstration and the number of 

GEAR UP participants expected to be in 

ninth grade during the 2013–2014 or 

2014–2015 academic year at each GEAR 

UP school identified. (NCES school 

identification numbers can be found at: 

http://nces.ed.gov/ccd/schoolsearch/). 

Priority 2: College Savings Accounts 

and Financial Counseling. 

To meet this priority, an applicant 

must submit in its application a 

comprehensive plan for providing (1) 

students in half of the GEAR UP high 

schools identified by the applicant with 

safe and affordable deposit accounts at 

federally insured banks, credit unions, 

or other institutions that offer safe and 

affordable financial services consistent 

with provisions of this Priority, and (2) 

financial incentives to encourage saving 

and related financial counseling to 

students and parents. 

An applicant also must agree in its 

application to participate in an 

evaluation of this college savings 

account demonstration project that will 

examine the effect of college savings 

accounts and counseling on student and 

family behaviors and attitudes 

associated with college enrollment, as 

described in the Research Evaluation 

section of this priority. The 

Department’s Institute of Education 

Sciences (IES) in partnership with the 

Office of Postsecondary Education 

(OPE) will oversee the evaluation, 

which will be conducted by an IES 

evaluation contractor. 

I. College Savings Accounts and 

Financial Counseling 

The applicant must describe in its 

application its plan for implementing 

college savings accounts and financial 

counseling, including how, preferably at 

the time of application but no later in 

time than to have all savings accounts 

operational before the start of the 

cohort’s ninth grade in the 2013–2014 or 

2014–2015 school years, it will— 

(a) Student Savings Accounts. 

(1) In partnership with a financial 

institution, provide students with an 

account that allows saving in an 

interest-bearing, federally insured 

deposit account, U.S. Government 

Treasury securities, or a fully 

guaranteed savings option within a 529 

college savings plan. Accounts may also 

present students and families with 

investment options that present risks in 

exchange for the potential for larger 

returns but that are in no way 

guaranteed. 

(2) Ensure that Federal funds are 

maintained in a single ‘‘notional’’ 

account that is in fact separate from any 

non-Federal funds, tracks the amount of 

Federal GEAR UP seed and matching 

funds and accrued interest earned by 

each student, permits each student to 

see both the Federal funds and 

associated interest earned as well as any 

non-Federal funds in a single account 

statement, and is invested only in 

federally insured vehicles or U.S. 

Treasury securities; 

(3) Ensure that the non-Federal 

investments are in U.S. Government 

Treasury securities or a low- or no-fee 

age-based fund unless the parents or 

student chooses otherwise; 

(4) Open savings accounts for 

students in automatic or nearly 

automatic fashion and describe how the 

savings account enrollment approach 

entails or approximates an automatic 

enrollment framework. Automatic 

enrollment means parents and students 

are not required to opt into the account, 

but may opt out of it. If parents and 

students take no action, the account is 

opened. Action is required to decline 

participation. 

Note: Applicants are also encouraged to 

propose automatic savings options, such as 

automatic payroll deductions by parents of 

participating students. 

(5) Ensure that individual deposits 

could be made easily and at no cost by 

the student, the student’s parents, or 

others on the student’s behalf; that 

deposits would be able to be made 

online, including on mobile devices, in 

person at convenient locations, or by 

mail; and that account information 


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would be viewable online, including on 

mobile devices; and 

(6) Ensure that funds are held in the 

name of the account trustee described in 

paragraph (k) of part I of this priority 

with the participating students named 

as beneficiaries. 

(b) Federal Seed and Matching. 

Provide for Federal seed and matching 

of Federal funds in student savings 

accounts for students in participating 

treatment high schools as follows: 

(1) Within two weeks of the beginning 

of students’ ninth grade school year in 

the fall of 2013 or the fall of 2014, seed 

each student’s account with $200 in 

Federal GEAR UP funding. 

(2) Each month, for every contribution 

up to $25 beyond the initial seed 

amount that the student or family 

deposits into the student’s account, 

deposit an additional equal size 

contribution up to $25 of Federal GEAR 

UP funding into the account, for a 

maximum of $300 in Federal matching 

funds each year for a maximum of four 

years. 

(3) Notwithstanding the monthly cap 

on contributions referenced in 

paragraph two above, once per quarter 

during each calendar year during the 

project period, on a date approved by 

the Department, offer students and 

parents a two-week catch-up period if 

the student has not earned the 

maximum monthly match for that year 

and encourage students and families to 

make contributions at least sufficient to 

earn up to the maximum Federal match. 

(4) Ensure that if, at the end of each 

calendar year, the student has not 

exhausted the Federal match, any 

unearned matching funds would no 

longer be available to that student or to 

the applicant and would be returned to 

the Department. 

(c) Non-Federal Seed and Matching. 

Not provide additional seed or matching 

funding from GEAR UP or non-GEAR 

UP resources to participating students 

beyond the funds described in (b), or 

solicit or raise money from non-Federal 

sources as additional contributions to 

the student’s non-Federal college 

savings account. 

(d) Withdrawal and Transfer of 

Federal Funds. Provide for the 

withdrawal and transfer of Federal 

GEAR UP funds as follows: 

(1) The applicant must ensure that 

withdrawals of Federal GEAR UP funds 

are made only upon approval of the 

savings account trustee and are only 

made from the account to eligible 

students, or to an institution of higher 

education, as the term is defined in 

section 102 of the HEA, on behalf of a 

student upon that student’s enrollment 

in an HEA Title IV-eligible institution of 

higher education, as the term is defined 

in section 102 of the HEA, for the 

purposes of paying for tuition, fees, 

course materials, living expenses, and 

other covered educational expenses as 

defined in the HEA, and other costs 

related to postsecondary education that 

the account trustee, based on 

instructions from the grantee, 

determines to be appropriate. 

(2) An account trustee may not 

withdraw Federal GEAR UP funds for 

non-qualified purposes and may not 

transfer them to other individuals. If 

this rule is broken, the Department may 

require the applicant to terminate its 

relationship with the trustee and select 

a different entity to serve as savings 

account trustee. The initial trustee may 

be subject to penalties for misuse of 

Federal funds. 

(e) Withdrawal and Transfer of NonFederal Funds. Establish rules for the 

withdrawal and transfer of non-Federal 

funds, which must include a 

requirement that any withdrawal or 

transfer of non-Federal funds must be 

overseen by the account trustee. A 

withdrawal of non-Federal funds from 

the savings account for non-qualified 

purposes will result in a removal of 

Federal matching funds that have been 

contributed on behalf of the student if 

the amount of non-Federal funds 

remaining in the account after the nonqualified withdrawal is less than the 

total amount of Federal matching funds 

contributed (not including the $200 

Federal seed). 

For example, if student and parent 

contributions total $140, Federal GEAR 

UP matches total $120, and the student 

withdraws $50 in non-Federal funds for 

non-qualified purposes, then $30 in 

Federal GEAR UP matching funds 

earned up until that point would be 

removed from the account because the 

amount of non-Federal funds remaining 

in the account after the non-qualified 

withdrawal—$90—is $30 less than the 

amount of Federal matching funds 

contributed. The Federal matching 

funds could be earned back in catch-up 

periods during that same year. The $200 

seed money provided with Federal 

GEAR UP funds will not be removed 

from the account. 

(f) Student Eligibility. Establish 

student eligibility to receive Federal 

GEAR UP funds as a seed and match for 

GEAR UP student savings accounts as 

follows: 

(1) Students must be enrolled in the 

ninth grade in one of the randomly 

selected treatment high schools (as 

described in the Research Evaluation 

section of this priority) in the fall of 

2013 or the fall of 2014. 

(2) If a student does not use funds in 

the student’s account within six years of 

his or her scheduled completion of 

secondary school, the undisbursed 

Federal GEAR UP funds must be 

returned to the Department. 

(3) Students who transfer from a 

GEAR UP high school to a non-GEAR 

UP high school during the project 

period will continue to remain eligible 

for the matching funds from the grantee. 

(4) At the discretion of the grantee, 

students who during the project period 

become members of the GEAR UP 

cohort by transferring from a nontreatment high school into a treatment 

GEAR UP high school after ninth grade 

may have an account with the $200 seed 

money and availability of matching 

funds, provided that the grantee has 

sufficient funds to first make the 

matches it is required to make for 

students in the treatment high schools. 

(g) Financial Counseling. Provide 

general and targeted (that is, specific to 

each individual’s account and financial 

circumstances) savings account and 

financial counseling to all students in 

the treatment group and to their parents. 

Counseling should encourage regular 

saving and prepare students and their 

families to make informed financial 

decisions about college and other 

matters. Counseling must include at 

least 12 hours per year of counseling for 

students and at least biannual 

counseling meetings for parents, which 

must include a review of the 

contributions to the account and any 

interest accrued. The counseling must 

be in addition to, and may not serve as, 

the financial aid, financial literacy, or 

college savings counseling already 

provided as part of regular GEAR UP 

services. 

(h) Staff Professional Development 

and Coordination with the Department. 

(1) Agree to participate in 

Department-provided professional 

development for the GEAR UP or school 

staff who will deliver the financial 

planning and counseling described in 

paragraph (g) of part I of this priority. 

(2) Ensure that the project director, 

site coordinators, and appropriate 

project staff participate in meetings of 

GEAR UP grantees that the Department 

will convene to provide professional 

development and technical assistance to 

GEAR UP grantees participating in the 

demonstration. 

Note: The meetings are likely to be held in 

conjunction with the annual meetings of the 

National Council for Community and 

Education Partnerships (NCCEP), the 

association of GEAR UP grantees. The 

February 2013 meeting, held in conjunction 

with the GEAR UP Capacity-Building 

Workshop, will likely cover technical 


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assistance to the State administrators of the 

college savings plans, and the logistical and 

administrative issues in setting up the college 

savings accounts. The remainder of the 

meetings during the project period will likely 

focus on professional development for GEAR 

UP staff providing the counseling to families. 

(i) Site Coordination. Designate a site 

coordinator for each GEAR UP high 

school that participates in the 

demonstration and describe the role of 

the coordinator and to whom he or she 

will be accountable. The site 

coordinators in schools that are 

randomly selected to provide college 

savings accounts and financial 

counseling (treatment schools) have 

responsibility, exercised consistent with 

the State’s plan and approved project 

application, for ensuring that their 

schools meet all requirements for 

participating in the college savings 

demonstration project. Coordinators 

must, for example, ensure that college 

savings accounts are opened and seeded 

within two weeks of the start of ninth 

grade; that related financial counseling 

and coaching are provided to 

participating students and parents; and 

that schools cooperate with data 

collection for the evaluation. (See the 

Research Evaluation section of this 

priority for further information on 

selection of the treatment schools). Site 

coordinators in schools that are not 

participating in the college savings 

account and counseling components 

(control schools) must ensure that their 

schools cooperate with the data 

collection for the evaluation. 

(j) Savings Account Administrator. 

Select a savings account administrator 

to hold the account funds, accept 

deposits, and issue qualified 

withdrawals. The applicant must 

identify the account administrator in the 

application or describe the process by 

which the account administrator will be 

selected. 

The account administrator must be 

able to fulfill its role until all Federal 

funds have been disbursed or returned 

to the Department. During the grant 

project period, modest administrative 

fees, not to exceed one percent of 

account balances, could be paid to the 

savings account administrator with 

Federal GEAR UP funds to cover 

expenses related to the GEAR UP 

College Savings Account Demonstration 

Project. 

(k) Savings Account Trustee. Select a 

savings account trustee to manage the 

account funds and approve withdrawals 

and other account activities. The 

account trustee must have demonstrated 

experience in successfully managing 

financial services. The applicant must 

identify the account trustee in the 

application or describe the process by 

which the account trustee will be 

selected. 

The account trustee must be able to 

fulfill its role until all Federal funds 

have been disbursed or returned to the 

Department. The account trustee may 

not be a student’s parent or guardian, 

and must be separate and distinct from 

the account administrator. The trustee 

must be a State agency, such as a State 

Department of Treasury, Office of the 

Governor, Lieutenant Governor, or 

Comptroller, a tax-exempt non-profit 

organization or foundation, or for-profit 

organization or business with 

demonstrated expertise and experience 

in successfully managing financial 

services. During the grant project 

period, modest administrative fees, not 

to exceed one percent of account 

balances, could be paid to the savings 

account trustee with Federal GEAR UP 

funds to cover expenses related to the 

GEAR UP College Savings Account 

Demonstration Project. 

(l) Grantee Coordinator. Specify a 

person or persons at the State and local 

educational agency (LEA) level who will 

administer and coordinate all 

components of the demonstration, 

including provision of services provided 

by the GEAR UP high schools, 

monitoring the rules established for and 

activities carried out by the savings 

account administrators and trustees 

including distribution of letters, 

notifying parents or guardians about the 

administration of the student survey by 

the evaluator and about the release of 

designated ‘‘directory information’’ from 

the education records of the student to 

the savings account administrator, the 

savings account trustee, or both, as 

needed to assist with establishing and 

managing the college savings accounts, 

and distributing forms enabling parents 

or guardians to opt out of participation 

in the college savings demonstration 

project. (The Department will provide a 

sample parent/guardian letter and opt 

out form.) The grantee coordinator must 

also include aggregate information about 

the college savings account 

demonstration project in the grantee’s 

annual performance report to the 

Department, including the number of 

accounts opened and the total amount 

of Federal GEAR UP matching funds 

deposited on behalf of students. The 

grantee coordinator must also respond 

to the evaluators’ annual request for 

information on individual student 

accounts, including the timing and 

amounts of disbursements of seed and 

matching funds, and the student’s name, 

address, and date of birth. 

(m) Directory Information Policies. 

Include only districts or schools that 

will have directory information policies 

in place prior to July 1, 2013, or July 1, 

2014, that allow for student information 

to be shared in compliance with Federal 

law with the savings account 

administrator, the savings account 

trustee, or both, as needed to establish 

and manage the college savings 

accounts. Under the provisions of the 

Family Educational Rights and Privacy 

Act (FERPA) and its implementing 

regulations (20 U.S.C. 1232g and 34 CFR 

Part 99), each of the LEAs or schools in 

the application must have provided 

public notice that the district or schools 

have designated as ‘‘directory 

information’’ under FERPA the 

student’s name, address, grade level, 

and date of birth. In addition, in 

accordance with FERPA, if any parent 

or guardian of a student has opted out 

of the disclosure of this ‘‘directory 

information,’’ the school or LEA will not 

provide the ‘‘directory information’’ for 

that student to the savings account 

administrator, the savings account 

trustee, or both, as needed to assist with 

establishing the college savings 

accounts, and savings accounts with 

GEAR UP seed money will not be 

opened in his or her name, unless the 

parent or guardian of that student 

provides consent under 34 CFR 99.30. 

(n) Grantee Non-Federal Match 

Requirement. Meet the statutory nonFederal match requirement (see Section 

404C(b) of the HEA and 34 CFR 694.7.) 

Note: A State grantee would meet the 

statutory match requirement tied to these 

additional research demonstration project 

funds through any ‘‘over-matched’’ nonFederal funds it already is committed to 

providing under its regular GEAR UP 

application. A State that would need to 

provide other non-Federal funds in order to 

meet the statutory match requirement tied to 

GEAR UP funds provided for the research 

demonstration project would need to include 

with its application a budget of how it 

proposed to do so. Contributions of students, 

families, parents’ employers, communitybased organizations, religious organizations, 

and others to student savings account could 

be treated as a matching contribution, but, if 

during any project year these private 

contributions to savings account were less 

than anticipated, a State would have to 

ensure by the end of each project year that 

it had met the annual matching requirement 

through other non-Federal contributions to 

this project or the regular GEAR UP 

activities. 

(o) Budget. Provide a budget and 

budget narrative with projected charges 

of Federal GEAR UP funds and any nonFederal matching contributions, that 

describes the expected costs of 

implementing the proposed project, 

including provision of payment to the 

account administrator, the account 


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5052 Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 

trustee, or both of reasonable costs for 

managing the savings accounts 

according to requirements of this 

section. 

(p) Over-matching. A family that overmatches the Federal account in any 

month may not receive credit for the 

amount of over-match in any future 

month, including a catch-up period, for 

purposes of meeting that month’s GEAR 

UP program matching contribution. 

II. Research Evaluation 

The applicant must describe in its 

application its agreement to the 

following: 

(a) Random Assignment of Schools. 

An applicant must— 

(1) Agree to a random assignment by 

the evaluation contractor of one-half of 

the GEAR UP high schools identified in 

its application for their students to 

receive demonstration services 

(treatment schools). In addition to the 

regular GEAR UP services offered at 

these treatment schools, GEAR UP 

projects must also offer the college 

savings account and financial 

counseling intervention in accordance 

with Priority 1 (Funding Eligibility). 

The students in the remainder of the 

high schools (control schools) will not 

receive the college savings account and 

financial counseling components but 

will continue to receive regular GEAR 

UP services. 

(2) Agree not to offer a program that 

provides seed or matching funds for 

college savings accounts in the control 

schools for the duration of the GEAR UP 

grant. 

(b) Data Collection. The applicant and 

the LEA(s) and GEAR UP high schools 

that would like to implement college 

savings accounts (some of which will 

become control schools) must agree to 

participate and cooperate in the data 

collection conducted by the 

Department’s evaluator, which will 

include the following: 

(1) Two surveys of GEAR UP project 

directors at the State education agency 

(SEA) or LEA level and site coordinators 

for each school about the 

implementation of the college savings 

account and counseling components, 

including the extent to which the 

college savings account counseling was 

provided in the treatment schools and 

counseling and other services were 

provided under the GEAR UP grant in 

both treatment and control schools; 

(2) Two surveys of GEAR UP students 

about their participation in GEAR UP 

program activities and other college 

access programs; their expectations 

about college enrollment and costs; their 

knowledge about college savings and 

financial aid; their financial literacy; 

their plans for enrollment in collegepreparatory courses; and their financial 

behaviors, including the extent to which 

they are saving for college; 

(3) Two surveys of parents of students 

participating in the GEAR UP program, 

in a form that will be comprehensible to 

parents of English language learners, 

about their participation in GEAR UP 

program activities and other college 

access programs; their expectations 

about their child’s college enrollment 

and costs; their knowledge about college 

savings and financial aid; their financial 

literacy; and their financial decisions, 

including the extent to which they are 

saving for college; 

(4) For treatment schools, data on the 

extent to which their staff attend the 

required professional development; 

(5) For both treatment and control 

schools, rosters of all GEAR UP 

participants who are in the ninth grade 

in fall 2013 or fall 2014, including the 

names of the students, and other 

identifying information (such as their 

dates of birth, zip codes, parent contact 

information, or district or school 

identification numbers) that will enable 

the Department’s evaluator to request 

school administrative records from the 

State or LEA for the appropriate 

students; 

(6) Access to the appropriate State or 

LEA school administrative records, 

which will be used to measure student 

characteristics and achievement prior to 

the ninth grade, student attendance, 

course taking patterns, and credits in 

grades 9–12 for students in the 

treatment and control schools; 

(7) From the grantee, annual 

information on the accounts of 

individual students, including the 

timing and amounts of disbursements of 

seed and matching funds, and the 

student’s name, address, and date of 

birth. 

(c) Letters of Support. Each applicant 

must include in its application the 

following: 

(1) Letters of support from the 

relevant LEAs. Unless the SEA agrees in 

the application to provide this same 

data on its own, these letters of support 

also must contain the LEA’s agreement 

to provide the relevant school records 

data to the evaluation contractor, 

including the following school records 

data for GEAR UP participants who are 

enrolled in the ninth grade in the 

treatment schools and control schools in 

the fall 2013 or fall 2014, regardless of 

whether the student has continued to be 

enrolled in his or her original high 

school: 

(i) Scores on State or districtadministrated assessments of reading 

and math for the seventh and eighth 

grades and high school years; 

(ii) High school attendance; 

(iii) High school courses in which the 

student was enrolled and grades and 

credits received for those courses; 

(iv) Demographic information such as 

gender, race/ethnicity, parents’ 

educational attainment, English 

proficiency, and the extent to which a 

language other than English is spoken at 

home; 

(v) Whether the student is certified as 

eligible for free or reduced price lunch 

through the National School Lunch 

Program; and 

(vi) Whether the student has an 

individualized education program. 

(2) A letter from the principal of each 

high school identified in the application 

agreeing to participate in all aspects of 

the evaluation and grant, including: 

(i) Random assignment of the high 

school; 

(ii) If randomly selected to implement 

the demonstration services, allowing the 

GEAR UP program to offer the college 

savings account and counseling 

components to eligible GEAR UP 

participants at the principal’s high 

school; and 

(iii) Regardless of whether a school is 

in the treatment or control group, 

provision to the evaluation contractor of 

rosters of GEAR UP participants who are 

in the ninth grade in fall 2013 or fall 

2014, including identifying information 

(such as student names, dates of birth, 

zip codes, parent contact information, or 

district or school identification 

numbers) that will enable the contractor 

to request the administrative records 

from the State or LEA about the 

appropriate students. 

(3) Letter from the superintendent of 

each LEA overseeing the schools in the 

evaluation, agreeing to all aspects of the 

evaluation and grant, including— 

(i) Random assignment of their GEAR 

UP high schools listed in the 

application; 

(ii) If randomly selected to implement 

the demonstration services, an 

agreement allowing the State GEAR UP 

program to offer the college savings 

account and financial counseling to 

eligible GEAR UP participants 

consistent with the priorities and 

requirements in this notice of final 

priorities; and 

(iii) Regardless of whether the schools 

are in the treatment or control group, an 

agreement to provide to the evaluation 

contractor rosters of GEAR UP 

participants who are in the ninth grade 

in fall 2013 or fall 2014, including 

identifying information (such as student 

names, dates of birth, zip codes, parent 

contact information, or district or school 


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Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 5053 

identification numbers) that will enable 

the contractor to request the 

administrative records from the State or 

LEA about the appropriate students. 

(iv) An agreement to have district or 

school directory information policies in 

place prior to July 1, 2013, or July 1, 

2014, that allow for student information 

to be shared in compliance with Federal 

law with the savings account 

administrator, the savings account 

trustee, or both, as needed to establish 

and manage the college savings 

accounts. Under the provisions of the 

FERPA and its implementing 

regulations, each of the LEAs in the 

application or schools therein must 

have provided public notice that the 

district or school has designated as 

‘‘directory information’’ under FERPA 

the student’s name, grade level, address, 

and date of birth. In addition, in 

accordance with FERPA, if any parents 

or guardians of a student has opted out 

of the disclosure of this student 

directory information, the school or LEA 

will not provide ‘‘directory 

information’’ on that student to the 

savings account administrator or the 

savings account trustee, and savings 

accounts with GEAR UP seed money 

will not be opened in his or her name, 

unless the parent or guardian of that 

student provides consent under 34 CFR 

99.30. 

Types of Priorities: When inviting 

applications for a competition using one 

or more priorities, we designate the type 

of each priority as absolute, competitive 

preference, or invitational through a 

notice in the Federal Register. The 

effect of each type of priority follows: 

Absolute priority: Under an absolute 

priority, we consider only applications 

that meet the priority (34 CFR 

75.105(c)(3)). 

Competitive preference priority: 

Under a competitive preference priority, 

we give competitive preference to an 

application by (1) awarding additional 

points, depending on the extent to 

which the application meets the priority 

(34 CFR 75.105(c)(2)(i)); or (2) selecting 

an application that meets the priority 

over an application of comparable merit 

that does not meet the priority (34 CFR 

75.105(c)(2)(ii)). 

Invitational priority: Under an 

invitational priority, we are particularly 

interested in applications that meet the 

priority. However, we do not give an 

application that meets the priority a 

preference over other applications (34 

CFR 75.105(c)(1)). 

This notice of final priorities does not 

preclude us from proposing additional 

priorities, requirements, definitions, or 

selection criteria, subject to meeting 

applicable rulemaking requirements. 

Note: This notice of final priorities does 

not solicit applications. In any year in which 

we choose to implement this priority, we 

invite applications through a notice in the 

Federal Register. 

Executive Orders 12866 and 13563 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Secretary must determine whether this 

regulatory action is ‘‘significant’’ and, 

therefore, subject to the requirements of 

the Executive order and subject to 

review by the Office of Management and 

Budget (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. 

This final regulatory action is not a 

significant regulatory action subject to 

review by OMB under section 3(f) of 

Executive Order 12866. 

We have also reviewed this final 

regulatory action 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 

upon 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 priorities 

only on a reasoned determination that 

their benefits justify their costs. In 

choosing among alternative regulatory 

approaches, we selected those 

approaches that maximize net benefits. 

Based on the analysis that follows, the 

Department believes that this regulatory 

action is consistent with the principles 

in Executive Order 13563. 

We also have determined that this 

regulatory action does not unduly 

interfere with State, local, and tribal 

governments in the exercise of their 

governmental functions. 

In accordance with both Executive 

orders, the Department has assessed the 

potential costs and benefits, both 

quantitative and qualitative, of this 

regulatory action. The potential costs 

are those resulting from statutory 

requirements and those we have 

determined as necessary for 

administering the Department’s 

programs and activities. 

Intergovernmental Review: This 

program is subject to Executive Order 

12372 and the regulations in 34 CFR 

part 79. One of the objectives of the 

Executive order is to foster an 

intergovernmental partnership and a 

strengthened federalism. The Executive 

order relies on processes developed by 

State and local governments for 

coordination and review of proposed 

Federal financial assistance. 

This document provides early 

notification of our specific plans and 

actions for this program. 

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. 


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5054 Federal Register / Vol. 78, No. 15 / Wednesday, January 23, 2013 / Rules and Regulations 

Electronic Access to This Document: 

The official version of this document is 

the document published in the Federal 

Register. Free Internet access to the 

official edition of the Federal Register 

and the Code of Federal Regulations is 

available via the Federal Digital System 

at: www.gpo.gov/fdsys. At this site you 

can view this document, as well as all 

other documents of this Department 

published in the Federal Register, in 

text or Adobe Portable Document 

Format (PDF). To use PDF you must 

have Adobe Acrobat Reader, which is 

available free at the site. 

You may also access documents of the 

Department published in the Federal 

Register by using the article search 

feature at: www.federalregister.gov. 

Specifically, through the advanced 

search feature at this site, you can limit 

your search to documents published by 

the Department. 

Dated: January 16, 2013. 

David A. Bergeron, 

Acting Assistant Secretary for Postsecondary 

Education. 

[FR Doc. 2013–01125 Filed 1–22–13; 8:45 am] 

BILLING CODE 4000–01–P 


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