42380 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

DEPARTMENT OF EDUCATION 

[Docket ID ED–2009–OPE–0005] 

34 CFR Parts 600, 668, 675, 686, 690, 

and 692 

RIN 1840–AC99 

General and Non-Loan Programmatic 

Issues 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Secretary proposes to 

implement various general and non-loan 

provisions that were added to the 

Higher Education Act of 1965, as 

amended (HEA), by the Higher 

Education Opportunity Act of 2008 

(HEOA) by amending the regulations for 

Institutional Eligibility Under the 

Higher Education Act of 1965, the 

Student Assistance General Provisions, 

the Federal Work-Study (FWS) 

Programs, the Teacher Education 

Assistance for College and Higher 

Education (TEACH) Grant Program, the 

Federal Pell Grant Program, and the 

Leveraging Educational Assistance 

Partnership Program (LEAP). 

DATES: We must receive your comments 

on or before September 21, 2009. 

ADDRESSES: Submit your comments 

through the Federal eRulemaking Portal 

or via postal mail, commercial delivery, 

or hand delivery. We will not accept 

comments by fax or by e-mail. Please 

submit your comments only one time, in 

order to ensure that we do not receive 

duplicate copies. In addition, please 

include the Docket ID at the top of your 

comments. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov to submit 

your comments electronically. 

Information on using Regulations.gov, 

including instructions for accessing 

agency documents, submitting 

comments, and viewing the docket, is 

available on the site under ‘‘How To Use 

This Site.’’ 

• Postal Mail, Commercial Delivery, 

or Hand Delivery. If you mail or deliver 

your comments about these proposed 

regulations, address them to Jessica 

Finkel, U.S. Department of Education, 

1990 K Street, NW., room 8031, 

Washington, DC 20006–8502. 

Privacy Note: The Department’s policy for 

comments received from members of the 

public (including those comments submitted 

by mail, commercial delivery, or hand 

delivery) is to make these submissions 

available for public viewing in their entirety 

on the Federal eRulemaking Portal at http:// 

www.regulations.gov. Therefore, commenters 

should be careful to include in their 

comments only information that they wish to 

make publicly available on the Internet. 

FOR FURTHER INFORMATION CONTACT: For 

general information or information 

related to the non-Title IV revenue 

requirement (90/10), John Kolotos. 

Telephone: (202) 502–7762 or via the 

Internet at: John.Kolotos@ed.gov. 

For information related to all Federal 

Pell Grant Program issues and the 

LEAP/GAP Program, Fred Sellers and 

Jacquelyn Butler. Telephone: (202) 502– 

7502 and (202) 502–7890, respectively, 

or via the Internet at: Fred.Sellers@ 

ed.gov or Jacquelyn.Butler@ed.gov. 

For information related to the 

provisions for readmission for 

servicemembers, teach-outs, peer-topeer file sharing, baccalaureate in liberal 

arts, and institutional plans for 

improving the academic program, 

Wendy Macias. Telephone: (202) 502– 

7526 or via the Internet at: 

Wendy.Macias@ed.gov. 

For information related to all Federal 

Work-Study Program issues, Nikki 

Harris and Harold McCullough. 

Telephone: (202) 219–7050 and (202) 

377–4030, respectively, or via the 

Internet at Nikki.Harris@ed.gov or 

Harold.McCullough@ed.gov. 

For information related to the 

provisions for fire safety standards, 

missing students procedures, hate crime 

reporting, emergency response and 

evacuation, and students with 

intellectual disabilities, Jessica Finkel. 

Telephone: (202) 502–7647 or via the 

Internet at: Jessica.Finkel@ed.gov. 

For information related to the 

provisions for extenuating 

circumstances under the TEACH Grant 

Program, Jacquelyn Butler. Telephone: 

(202) 502–7890, or via the Internet at: 

Jacquelyn.Butler@ed.gov. 

For information related to the 

consumer information requirements, 

Brian Kerrigan. Telephone: (202) 219– 

7058, or via the Internet at: 

Brian.Kerrigan@ed.gov. 

If you use a telecommunications 

device for the deaf, call the Federal 

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

877–8339. 

Individuals with disabilities can 

obtain this document in an accessible 

format (e.g., Braille, large print, 

audiotape, or computer diskette) on 

request to one of the contact persons 

listed under FOR FURTHER INFORMATION

CONTACT. 

SUPPLEMENTARY INFORMATION: 

Invitation to Comment 

As outlined in the section of this 

notice entitled Negotiated Rulemaking, 

significant public participation, through 

six public hearings and three negotiated 

rulemaking sessions, has occurred in 

developing this notice of proposed 

rulemaking (NPRM). In accordance with 

the requirements of the Administrative 

Procedure Act, the Department invites 

you to submit comments regarding these 

proposed regulations on or before 

September 21, 2009. To ensure that your 

comments have maximum effect in 

developing the final regulations, we 

urge you to identify clearly the specific 

section or sections of the proposed 

regulations that each of your comments 

addresses and to arrange your comments 

in the same order as the proposed 

regulations. Note that enactment as final 

regulations of any and all provisions of 

these proposed regulations is subject to 

the availability of sufficient 

administrative savings and any 

provision may be removed from the 

final rules if sufficient savings do not 

materialize. 

We invite you to assist us in 

complying with the specific 

requirements of Executive Order 12866, 

including its overall requirements to 

assess both the costs and the benefits of 

the proposed regulations and feasible 

alternatives, and to make a reasoned 

determination that the benefits of these 

proposed regulations justify their costs. 

Please let us know of any further 

opportunities we should take to reduce 

potential costs or increase potential 

benefits while preserving the effective 

and efficient administration of the 

programs. 

As noted elsewhere in the NPRM, two 

of the Department’s negotiated 

rulemaking committees were to a minor 

extent involved in the proposed 

revisions to 34 CFR 668.184(a)(1) 

(Determining cohort default rates for 

institutions that have undergone a 

change in status) in part 668, subpart M 

of the Student Assistance General 

Provisions. Team V–General and NonLoan Programmatic Issues (Team V), 

was the negotiating committee 

responsible for the regulations regarding 

the treatment of cohort default rates for 

institutions that conduct teach-outs of 

closed institutions. Team II–LoansSchool-based Issues (Team II), 

negotiated all other changes to cohort 

default rates. 

We have included the proposed 

change to 34 CFR 668.184(a)(1) in this 

NPRM as well as in the notice of 

proposed rulemaking that we are 

publishing as a result of the negotiations 

of Team II. The proposed change is 

simply a cross-reference in 34 CFR 

668.184(a)(1) to 34 CFR 600.32(d) which 

provides that under certain 

circumstances the cohort default rate of 

a closed institution does not transfer in 

any way to the institution that conducts 


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Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 42381 

a teach-out at the site of the closed 

institution. We ask that when 

submitting any comments on the 

proposed changes to §§ 600.32(d) or 

668.184(a)(1), you submit the comments 

in the docket for this NPRM (Docket ID 

ED–2009–OPE–0005). 

During and after the comment period, 

you may inspect all public comments 

about these proposed regulations by 

accessing Regulations.gov. You may also 

inspect the comments, in person, in 

room 8031, 1990 K Street, NW., 

Washington, DC, between the hours of 

8:30 a.m. and 4 p.m., Eastern time, 

Monday through Friday of each week 

except Federal holidays. 

Assistance to Individuals With 

Disabilities in Reviewing the 

Rulemaking Record 

On request, we will supply an 

appropriate aid, such as a reader or 

print magnifier, to an individual with a 

disability who needs assistance to 

review the comments or other 

documents in the public rulemaking 

record for these proposed regulations. If 

you want to schedule an appointment 

for this type of aid, please contact one 

of the persons listed under FOR FURTHER

INFORMATION CONTACT. 

Negotiated Rulemaking 

Section 492 of the HEA requires the 

Secretary, before publishing any 

proposed regulations for programs 

authorized by Title IV of the HEA, to 

obtain public involvement in the 

development of the proposed 

regulations. After obtaining advice and 

recommendations from the public, 

including individuals and 

representatives of groups involved in 

the Federal student financial assistance 

programs, the Secretary must subject the 

proposed regulations to a negotiated 

rulemaking process. All proposed 

regulations that the Department 

publishes on which the negotiators 

reached consensus must conform to 

final agreements resulting from that 

process unless the Secretary reopens the 

process or provides a written 

explanation to the participants stating 

why the Secretary has decided to depart 

from the agreements. Further 

information on the negotiated 

rulemaking process can be found at: 

http://www.ed.gov/policy/highered/leg/ 

hea08/index.html. 

On December 31, 2009, the 

Department published a notice in the 

Federal Register (73 FR 80314) 

announcing our intent to establish five 

negotiated rulemaking committees to 

prepare proposed regulations. One 

committee would focus on issues 

related to lender and general loan issues 

(Team I—Loans—Lender General Loan 

Issues). A second committee would 

focus on school-based loan issues (Team 

II—Loans—School-based Loan Issues). 

A third committee would focus on 

accreditation (Team III—Accreditation). 

A fourth committee would focus on 

discretionary grants (Team IV— 

Discretionary Grants). A fifth committee 

would focus on general and non-loan 

programmatic issues (Team V—General 

and Non-Loan Programmatic Issues). 

The notice requested nominations of 

individuals for membership on the 

committees who could represent the 

interests of key stakeholder 

constituencies on each committee. 

Team V—General and Non-Loan 

Programmatic Issues (Team V) met to 

develop proposed regulations during the 

months of March 2009, April 2009, and 

May 2009. Team V agreed to establish 

five subcommittees to facilitate the 

discussion of the issues and expedite 

the development of the proposed 

regulations. The subcommittees 

included some of non-Federal 

negotiators and their alternates, outside 

experts regarding the particular issues 

addressed by a subcommittee, ED staff, 

and other interested parties. The 

subcommittees were: 

(1) Campus Safety, responsible for 

issues relating to Fire Safety Standards, 

Missing Student Procedures, Hate Crime 

Reporting, and Emergency Response 

and Evacuation Procedures. 

(2) Peer-to-Peer File Sharing, 

responsible for issues relating to illegal 

downloading of copyrighted materials. 

(3) Intellectual Disabilities, 

responsible for issues relating to 

establishing title IV eligible educational 

programs for students with intellectual 

disabilities. 

(4) LEAP/GAP, responsible for issues 

relating to LEAP and GAP programs. 

(5) 90/10, responsible for issues 

relating to the requirement that a 

proprietary institution must derive at 

least 10 percent of its revenue from 

sources other than funds from the title 

IV, HEA programs. 

In this NPRM we propose regulations 

for a variety of provisions, stemming 

from the work of the subcommittees and 

main committee, relating to the Federal 

grant and work-study programs, campus 

safety, educational programs for 

students with intellectual disabilities, 

copyright infringement, teach-outs, 

readmission of servicemembers, and 

non-Title IV revenue. 

The Department developed a list of 

proposed regulatory provisions based on 

the provisions contained in the HEOA 

and from advice and recommendations 

submitted by individuals and 

organizations as testimony to the 

Department in a series of six public 

hearings held on: 

• September 19, 2008, at Texas 

Christian University in Fort Worth, 

Texas; 

• September 29, 2008, at the 

University of Rhode Island, in 

Providence, Rhode Island; 

• October 2, 2008, at Pepperdine 

University, in Malibu, California; 

• October 6, 2008, at Johnson C. 

Smith University, in Charlotte, North 

Carolina; 

• October 8, 2008, at the U.S. 

Department of Education in 

Washington, DC; and 

• October 15, 2008, at Cuyahoga 

Community College, in Cleveland, Ohio. 

In addition, the Department accepted 

written comments on possible 

regulatory provisions submitted directly 

to the Department by interested parties 

and organizations. A summary of all 

comments received orally and in writing 

is posted as background material in the 

docket for this NPRM. Transcripts of the 

regional meetings can be accessed at 

http://www.ed.gov/policy/highered/leg/ 

hea08/index.html. 

Staff within the Department also 

identified issues for discussion and 

negotiation. 

At its first meeting, Team V reached 

agreement on its protocols. These 

protocols provided that for each 

community of interest identified as 

having interests that were significantly 

affected by the subject matter of the 

negotiations, the non-Federal 

negotiators would represent the 

organizations listed after their names in 

the protocols in the negotiated 

rulemaking process. 

Team V included the following 

members: 

• Clais Daniels-Edwards, University 

of California Student Association, and 

Serena Unrein (alternate), Arizona 

Students Association, representing 

students. 

• David Baime, American Association 

of Community Colleges, and Dr. Karla 

Leach (alternate), Western Wyoming 

Community College, representing twoyear public institutions. 

• John Curtice, State University of 

New York, and Karen Fooks (alternate), 

University of Florida, representing fouryear public institutions. 

• Scott Fleming, Georgetown 

University, and Suzanne Day (alternate), 

Harvard University, representing 

private, non-profit institutions. 

• Elaine Neely, Kaplan Higher 

Education Corp., and Mark Pelesh 

(alternate), Corinthian Colleges, Inc., 

representing private, for-profit 

institutions. 

• Ray Testa, Empire Education 

Group, and Dr. Richard Dumaresq 


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(alternate), Pennsylvania Association of 

Private School Administrators, 

representing cosmetology schools. 

• David Tipton, Berea College, and 

Ian Robertson (alternate), Warren 

Wilson College, representing work 

colleges. 

• Dr. Ray Keck, Texas A&M 

International University, and Karl 

Brockenbrough (alternate), Bowie State 

University, representing minorityserving institutions. 

• David Gelinas, Davidson College, 

and David Smedley (alternate), George 

Washington University, representing 

financial aid administrators. 

• Sandy Tallman, Ross Education 

LLC, and Diane Fleming (alternate), 

Central Michigan University, 

representing financial aid 

administrators. 

• Karen McCarthy, NASFAA, and 

Joan Berkes (alternate), NASFAA, 

representing financial aid 

administrators. 

• Maureen Laffey, Delaware Higher 

Education Commission, and Dr. Alan 

Edwards (alternate), State Council of 

Higher Education for Virginia, 

representing State student grant 

agencies. 

• Dr. Nick Bruno, University of 

Louisiana System, and John Higgins 

(alternate), Purdue University, 

representing business officers and 

bursars. 

• Dr. John Cavanaugh, Pennsylvania 

State Systems of Higher Education, 

representing State higher education 

executive officers. 

• S. Daniel Carter, Security on 

Campus, Inc., and Jonathan Kassa 

(alternate), Security on Campus, Inc., 

representing campus safety advocates. 

• Brendan McCluskey, UMDJ Office 

of Emergency Management, and Dr. 

John Petrie (alternate), George 

Washington University, representing 

campus safety administrators. 

• Ed Comeau, Campus Firewatch, and 

Phil Hagen (alternate) Georgetown 

University, representing fire safety 

advocates and administrators. 

• Paul D. Martin, Center for Campus 

Fire Safety, representing fire safety 

advocates. 

• Michael Lieberman, AntiDefamation League, and Cristina Finch 

(alternate), Human Rights Campaign, 

representing human rights advocates. 

• Delores Stafford, George 

Washington University, and Lisa 

Phillips (alternate), IACLEA, 

representing law enforcement. 

• Stephanie Smith Lee, NDSS, and 

Madeleine C. Will (alternate), 

representing individuals with 

intellectual disabilities. 

• Gregory Jackson, The University of 

Chicago, and Matthew Arthur 

(alternate), representing institutions on 

peer-to-peer file sharing. 

• David Green, NBC Universal, and 

Jennifer Jacobsen (alternate), Sony 

Music Entertainment, representing 

digital content owners on peer-to-peer 

file sharing. 

• Brian Kerrigan, U.S. Department of 

Education, representing the Federal 

Government. 

These protocols also provided that, 

unless agreed to otherwise, consensus 

on all of the amendments in the 

proposed regulations had to be achieved 

for consensus to be reached on the 

entire NPRM. Consensus means that 

there must be no dissent by any 

member. 

During the meetings, Team V 

reviewed and discussed drafts of 

proposed regulations. At the final 

meeting in May 2009, Team V did not 

reach consensus on the proposed 

regulations in this document. 

Summary of Proposed Changes 

These proposed regulations would 

implement general and non-Loan 

provisions of the HEA, as amended by 

the HEOA, including: 

• Establishing requirements under 

which students may receive up to two 

Federal Pell Grant Scheduled Awards 

during a single award year (see section 

401(b)(5)(A) of the HEA); 

• Providing the maximum Federal 

Pell Grant eligibility to a student whose 

parent was in the armed forces and died 

in Iraq or Afghanistan if the student was 

under 24 years old or enrolled in an 

institution of higher education at the 

time the parent died (see section 

401(F)(4) of the HEA); 

• Establishing extenuating 

circumstances under which a TEACH 

Grant recipient may be excused from 

fulfilling all or part of his or her service 

obligation (see section 420N(d)(2) of the 

HEA); 

• Expanding the use of FWS funds to 

permit institutions to compensate 

students employed in projects that teach 

civics in school, raise awareness of 

government functions or resources, or 

increase civic participation (see section 

443 of the HEA); 

• Allowing institutions located in 

major disaster areas to make FWS 

payments to disaster-affected students 

(see section 445(d) of the HEA). 

• Revising definitions and terms 

relating to work colleges (see section 

448 of the HEA). 

• Establishing new requirements for 

determining how proprietary 

institutions calculate the amount and 

percent of revenue derived from sources 

other than title IV, HEA program funds 

(see section 487(d) of the HEA). 

• Expanding the information that 

institutions must make available to 

prospective and enrolled students to 

include information on: The 

employment and placement of students, 

the retention rates of first-time, full-time 

undergraduate students, and completion 

and graduation rate data that is 

disaggregated by gender, race, and grant 

or loan assistance (see section 485(a) of 

the HEA). 

• Establishing requirements for 

institutions that maintain on-campus 

housing facilities to publish annually a 

fire safety report, maintain a fire log, 

and report fire statistics to the 

Department (see section 485(i) of the 

HEA). 

• Requiring institutions that provide 

on-campus housing facilities to develop 

and make available a missing student 

notification policy and allow students 

who reside on campus to confidentially 

register contact information (see section 

485(j) of the HEA). 

• Expanding the list of crimes that 

institutions must include in the hate 

crimes statistics reported to the 

Department (see section 485(f) of the 

HEA). 

• Requiring institutions to include in 

the annual security report a statement of 

emergency response and evacuation 

procedures (see section 485(f) of the 

HEA). 

• Expanding the eligibility for Federal 

Pell Grant, FWS, and FSEOG Program 

funds to students with intellectual 

disabilities (see sections 484(s) and 760 

of the HEA). 

• Establishing requirements under 

which an institution must readmit 

servicemembers to the same academic 

status they had when they last attended 

the institution (see section 484C of the 

HEA). 

• Providing that an institution that 

conducts a teach-out at a site of a closed 

institution may, under certain 

conditions, establish that site as an 

additional location (see sections 487(f) 

and 498 of the HEA). 

• Amending the definition of 

‘‘proprietary institution of higher 

education’’ to include institutions that 

provide a program leading to a 

baccalaureate degree in liberal arts, if 

the institution provided that program 

since January 1, 2009, and has been 

accredited by a regional accrediting 

agency since October 1, 2007, or earlier 

(see section 102(b)(1)(A) of the HEA). 

• Providing that an institution must 

certify that it has plans to effectively 

combat unauthorized distribution of 

copyrighted material and will offer 

alternatives to illegal downloading or 

peer-to-peer distribution of intellectual 


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property (see sections 485(a)(1) and 

487(a) of the HEA). 

• Expanding the information that an 

institution must make available to 

prospective and enrolled students to 

include a description of any plans the 

institution has to improve its academic 

program (see section 485(a) of the HEA). 

• Providing that the non-Federal 

share of student grants or work-study 

jobs under the LEAP Program must be 

State funds and that the non-Federal 

share no longer has to come from a 

direct appropriation of State funds (see 

section 415C(b)(10) of the HEA). 

• Requiring the State program to 

notify students that grants are LEAP 

Grants that are funded by the Federal 

Government, the State, and for LEAP 

Grants to students under the new Grants 

for Access and Persistence (GAP) 

Program, other contributing partners 

(see section 415C(b) of the HEA). 

• Establishing the activities, awards, 

allotments to States, matching funds 

requirements, consumer information 

requirements, application requirements, 

and other requirements needed to begin 

and continue participating in the GAP 

Program (see sections 415B and 415E of 

the HEA). 

Significant Proposed Regulations 

We group major issues according to 

subject, with appropriate sections of the 

proposed regulations referenced in 

parentheses. We discuss other 

substantive issues under the sections of 

the proposed regulations to which they 

pertain. Generally, we do not address 

proposed regulatory provisions that are 

technical or otherwise minor in effect. 

Part 600 Institutional Eligibility Under 

the Higher Education Act of 1965, as 

Amended 

Definition of Baccalaureate Liberal Arts 

Programs Offered by Proprietary 

Institutions (§ 600.5) 

Statute: Effective July 1, 2010, the 

HEOA amends the definition of 

proprietary institution of higher 

education in section 102(b)(1)(A) of the 

HEA to include an institution that 

provides a program leading to a 

baccalaureate degree in liberal arts that 

the institution has provided since 

January 1, 2009, so long as the 

institution has been accredited by a 

recognized regional accreditation 

agency or organization since October 1, 

2007, or earlier. As the language in 

section 102(b)(1)(A)(i) of the HEA is not 

new, this change does not affect the 

eligibility of current programs or alter 

the method used by the Department in 

determining that a program of training 

prepares students for gainful 

employment in a recognized 

occupation. 

Current Regulations: Section 

600.5(a)(5) defines a proprietary 

institution of higher education as one 

that provides an eligible program of 

training, defined in § 668.8, to prepare 

students for gainful employment in a 

recognized occupation. 

Proposed Regulations: The proposed 

change to § 600.5(a)(5) would add to the 

definition of proprietary institution of 

higher education, an institution that 

provides a program leading to a 

baccalaureate degree in liberal arts that 

the institution has provided since 

January 1, 2009, so long as the 

institution has been accredited by a 

recognized regional accreditation 

agency or organization since October 1, 

2007, or earlier. In addition, a new 

paragraph (e) would be added to § 600.5 

to include a definition of a program 

leading to a baccalaureate degree in 

liberal arts. The definition would 

require that the institution’s recognized 

regional accreditation agency or 

organization determine that the program 

is a general instructional program in the 

liberal arts subjects, the humanities 

disciplines, or the general curriculum, 

falling within one or more generally 

accepted instructional categories 

comprising such programs, but 

including only instruction in regular 

programs, and excluding independently 

designed programs, individualized 

programs, and unstructured studies. The 

generally accepted instructional 

categories would be: 

• A program that is a structured 

combination of the arts, biological and 

physical sciences, social sciences, and 

humanities, emphasizing breadth of 

study; 

• An undifferentiated program that 

includes instruction in the general arts 

or general science; 

• A program that focuses on 

combined studies and research in the 

humanities subjects as distinguished 

from the social and physical sciences, 

emphasizing languages, literatures, art, 

music, philosophy and religion; and 

• Any single instructional program in 

liberal arts and sciences, general studies 

and humanities not listed above. 

Reasons: The regulations are amended 

to reflect the changes made by the 

HEOA. The regulations would require 

that an institution’s accrediting agency 

determine that a program is a liberal arts 

program as defined in this section in 

order to ensure that a program meets a 

generally accepted standard for liberal 

arts programs. The proposed definition 

of a program leading to a baccalaureate 

degree in liberal arts is from the U.S. 

Department of Education’s National 

Center for Education Statistics’ (NCES) 

Classification of Instructional Programs 

(CIP), the Federal government statistical 

standard on instructional program 

classifications. Specifically, the 

instructional categories are from the 

description of CIP 24, Liberal Arts and 

Sciences, General Studies, and 

Humanities, which would ensure that a 

program meets a generally accepted 

standard for liberal arts programs. The 

definition excludes independentlydesigned programs, individualized 

programs, and unstructured studies as 

the Department believes that, to meet 

the statutory requirement that an 

institution offer a program, it must be an 

organized program of study that is 

essentially the same for all students, 

except that it could include some 

elective courses. 

Institutional Requirements for TeachOuts and Eligibility and Certification 

Procedures (§§ 600.2, 600.32, 668.14) 

Statute: The HEOA added paragraph 

(f) to section 487 of the HEA to provide 

that, whenever the Department initiates 

an action to limit, suspend, or terminate 

(LS&T) an institution’s participation in 

any Title IV program or initiates an 

emergency action against an institution, 

the institution must prepare a teach-out 

plan for submission to its accrediting 

agency. The teach-out plan must be 

prepared in accordance with section 

496(c)(6) of the HEA (mistakenly cited 

as section 496(c)(4) in the HEA) and any 

applicable title IV, HEA program 

regulations or accrediting agency 

standards. A teach-out plan is defined 

as a written plan that provides for 

equitable treatment of students if an 

institution ceases to operate before all 

students have completed their program 

of study, and may include, if required 

by the institution’s accrediting agency, a 

teach-out agreement. 

The HEOA also added section 498(k) 

of the HEA to provide that a location of 

a closed institution is eligible as an 

additional location of another 

institution for the purpose of 

conducting a teach-out if the teach-out 

is approved by the institution’s 

accrediting agency. The institution that 

conducts the teach-out under this 

provision is permitted to establish a 

permanent additional location at the 

closed institution without having to 

satisfy the requirements for additional 

locations in sections 102(b)(1)(E) and 

102(c)(1))(C) of the HEA—i.e., that a 

proprietary institution or a 

postsecondary vocational institution 

must have been in existence for two 

years to be eligible—and without 

assuming the liabilities of the closed 

institution. 


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42384 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

One of the four new accrediting 

agency operating procedures added by 

the HEOA as section 496(c)(3) of the 

HEA requires accrediting agencies to 

approve teach-out plans submitted by 

institutions they accredit if the 

Department notifies the agency of an 

action against an institution in 

accordance with section 487(f) of the 

HEA, if the institution’s accreditation is 

withdrawn, terminated or suspended, or 

if the institution intends to cease 

operations. This provision was 

negotiated by Team III—Accreditation 

and will be reflected in the NPRM 

developed to implement accreditation 

issues (Docket ID ED–2009–OPE–). 

Because of the overlap in these three 

provisions, the development of 

proposed regulatory language was 

coordinated between the two 

negotiating committees. 

Current Regulations: Section 600.32 

provides that an additional location is 

eligible to participate in the title IV, 

HEA programs if it meets the 

requirements for institutional eligibility 

in (1) § 600.4 (eligibility requirements 

for an institution of higher education), 

§ 600.5 (eligibility requirements for a 

proprietary institution), or § 600.6 

(eligibility requirements for a 

postsecondary vocational institution); 

(2) § 600.8 (treatment of a branch 

campus), and (3) § 600.10 (date, extent, 

duration, and consequences of 

eligibility). However, to qualify as an 

eligible additional location, a location is 

not required to have been in existence 

for two years unless (1) the location was 

a facility of another institution that has 

closed or ceased to provide educational 

programs for a reason other than a 

normal vacation period or a natural 

disaster that directly affects the 

institution or the institution’s students; 

(2) the applicant institution acquired, 

either directly from the institution that 

closed or ceased to provide educational 

programs, or through an intermediary, 

the assets at the location; and (3) the 

institution from which the applicant 

institution acquired the assets of the 

location owes a liability for a violation 

of an HEA program requirement and is 

not making payments in accordance 

with an agreement to repay that 

liability. An additional location that 

must meet the two-year rule for these 

reasons, nevertheless, is exempt from 

the two-year rule if it agrees (1) to be 

liable for all improperly expended or 

unspent title IV program funds received 

by the institution that has closed or 

ceased to provide educational programs; 

(2) to be liable for all unpaid refunds 

owed to students who received title IV 

program funds; and (3) to abide by the 

policy of the institution that has closed 

or ceased to provide educational 

programs regarding refunds of 

institutional charges to students in 

effect before the date of the acquisition 

of the assets of the additional location 

for the students who were enrolled 

before that date. 

Proposed Regulations: Section 600.2 

would define a teach-out plan as a 

written plan developed by an institution 

that provides for the equitable treatment 

of students if an institution, or an 

institutional location that provides 100 

percent of at least one program, ceases 

to operate before all students have 

completed their program of study, and 

may include, if required by the 

institution’s accrediting agency, a teachout agreement between institutions. 

Section 668.14 would be amended to 

include in the program participation 

agreement the requirement in section 

487(f) of the HEA. In addition to 

requiring an institution to submit a 

teach-out plan to its accrediting agency 

whenever the Department initiates an 

LS&T, or an emergency action against 

the institution, as required by statute, 

proposed § 668.14(b)(31) would require 

an institution to submit a teach-out plan 

when (1) the institution’s accrediting 

agency acts to withdraw, terminate, or 

suspend the accreditation or 

preaccreditation of the institution; (2) 

the institution’s State licensing or 

authorizing agency revokes the 

institution’s license or legal 

authorization to provide an educational 

program; (3) the institution intends to 

close a location that provides 100 

percent of at least one program; or (4) 

the institution otherwise intends to 

cease operations. 

Proposed § 600.32(d) would 

implement section 498(k) of the HEA to 

provide that an institution that conducts 

a teach-out for a closed institution 

whenever the Department initiates an 

LS&T, or an emergency action against 

the institution, may apply to have that 

site approved as an additional location, 

if the teach-out plan was approved by 

the closed institution’s accrediting 

agency. If the Department approves the 

institution to add the additional 

location, the ‘‘two-year rule’’ would not 

apply to the additional location. In 

addition, the institution would not 

assume the liabilities of the closed 

institution, and the institution would 

not assume the cohort default rate of the 

closed institution, provided the 

institutions are not related parties and 

there is no commonality of ownership 

or management between the 

institutions, as described in proposed 34 

CFR 668.188(b) and 34 CFR 668.207(b) 

(these sections address the 

determination of cohort default rates for 

institutions that have undergone a 

change in status). An institution that 

accepts responsibility for conducting a 

teach-out of students under such an 

arrangement would still have to comply 

with § 600.32(c)(3), which requires the 

additional location to abide by the 

policy of the institution that has closed 

or ceased to provide educational 

programs regarding refunds of 

institutional charges to students in 

effect before the date of the acquisition 

of the assets of the additional location 

for the students who were enrolled 

before that date. As a condition for 

approval of the additional location, the 

Department may require that payments 

from the institution conducting the 

teach-out to the owners of the closed 

institution, or related parties, be used to 

pay any liabilities owed by the closed 

institution. 

Reasons: The regulations are amended 

to reflect the changes made by the 

HEOA. 

In proposed § 668.14(b)(31), the 

circumstances under which an 

institution would be required to submit 

a teach-out plan to its accrediting 

agency would be expanded beyond the 

circumstances listed in the statute to 

specifically address other situations 

where the Department believes the 

potential closure will put significant 

numbers of students at risk of being 

unable to complete their program, 

including the closure of a location that 

provides 100 percent of at least one 

program. This list of circumstances 

would conform with proposed changes 

in §§ 602.3 and 602.24 of the Team III— 

Accreditation NPRM (Docket ID ED– 

2009–OPE–) for implementing section 

496(c)(3) of the HEA, which directs 

accrediting agencies to require 

institutions to submit a teach-out plan 

for approval upon the occurrence of 

certain events. As a result, the definition 

of a teach-out plan would apply to an 

institutional location that provides 100 

percent of at least one program, and 

would be the same definition used in 34 

CFR part 602 for the Secretary’s 

Recognition of Accrediting Agencies. 

Proposed § 600.32(d) would be 

consistent with statutory intent to 

encourage an institution to conduct a 

teach-out of a closed institution and our 

view that the cohort default rate of a 

closed institution could be a potential 

impediment that could dissuade another 

institution from conducting the teachout if its default rate would be adversely 

affected by the closed institution’s 

default rate. However, the proposed 

regulations would ensure that this 

provision is not used by an owner to 

circumvent an undesirable cohort 


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default rate or liabilities for one 

institution by having it become an 

additional location of another 

institution under the same, or related, 

ownership. Preserving the Department’s 

right to require that payments from the 

institution conducting the teach-out to 

the owners of the closed institution, or 

related parties, be used to pay any 

liabilities owed by the closed 

institution, provides the benefit to the 

institution that conducts the teach-out 

of not assuming any liabilities owed by 

the closed school, while ensuring that 

any funds paid to the owners of the 

closed school are applied against any 

title IV program liabilities owed by that 

institution. 

No changes are proposed to the 

applicability of § 600.32(c)—that the 

institution opening the additional 

location must continue to apply the 

refund policy for the students from the 

institution that has closed or ceased to 

provide educational programs. This 

obligation to protect the students by 

keeping the same refund policy in place 

continues because it is different from 

the pre-existing liabilities that the 

institution is not required to assume 

under this provision. 

Some non-Federal negotiators felt 

that, in keeping with proposed 34 CFR 

668.14(b)(31), proposed § 600.32(d) 

should be expanded to allow the 

exemptions from the two-year rule, the 

assumption of liabilities, and the 

assumption of the cohort default rate, to 

apply when an institution conducts a 

teach-out at an institution that closes for 

reasons other than those listed in 

section 498(k) of the HEA—i.e., the 

initiation of a limitation, suspension, or 

termination of the institution, or an 

emergency action against the institution 

by the Department. The Department 

would limit the availability of this 

procedure (allowing an institution to 

conduct a teach-out of a closed 

institution without the imposition of 

customary restrictions to discourage 

institutions not subject to an LS&T, or 

emergency action from arranging a 

closure and sale of the institution) 

without liabilities in situations where a 

buyer would otherwise purchase the 

institution and assume the institution’s 

liabilities under existing change of 

ownership rules. 

Part 668 Student Assistance General 

Provisions 

Readmission Requirements for 

Servicemembers (§ 668.18) 

Statute: The HEOA added new 

section 484C to the HEA to address 

institutional readmission requirements 

for servicemembers. Section 484C of the 

HEA provides that an institution of 

higher education may not deny 

readmission to a servicemember of the 

uniformed services for reasons relating 

to that service. In addition, a student 

who is readmitted to an institution 

under this section must be readmitted 

with the same academic status as the 

student had when he or she last 

attended the institution. An affected 

servicemember is any individual who is 

a member of, applies to be a member of, 

or performs, has performed, applies to 

perform, or has the obligation to 

perform, service in the uniformed 

services. This requirement applies to 

service in the uniformed services, 

whether voluntary or involuntary, on 

active duty in the Armed Forces, 

including service as a member of the 

National Guard or Reserve, for a period 

of more than 30 days under a call or 

order to active duty of more than 30 

days. 

Any student whose absence from an 

institution of higher education is 

necessitated by reason of service in the 

uniformed services is entitled to 

readmission if: 

• The student (or an appropriate 

officer of the Armed Forces or official of 

the Department of Defense) gives 

advance written or verbal notice of such 

service to the appropriate official at the 

institution; 

• The cumulative length of the 

absence and of all previous absences 

from that institution of higher education 

by reason of service in the uniformed 

services does not exceed five years; and 

• Except as otherwise provided in 

this section, the student submits a 

notification of intent to reenroll in the 

institution. 

However, no advance notice by the 

student is required if the giving of such 

notice is precluded by military 

necessity, such as a mission, operation, 

exercise, or requirement that is 

classified; or a pending or ongoing 

mission, operation, exercise, or 

requirement that may be compromised 

or otherwise adversely affected by 

public knowledge. In addition, any 

student (or an appropriate officer of the 

Armed Forces or official of the 

Department of Defense) who did not 

give advance notice of service to the 

appropriate official at the institution 

may meet the notice requirement by 

submitting, at the time the student seeks 

readmission, an attestation to the 

student’s institution that the student 

performed service in the uniformed 

services that necessitated the student’s 

absence from the institution. 

When determining the cumulative 

length of the student’s absence for 

service, the period of service does not 

include any service: 

• That is required, beyond five years, 

to complete an initial period of 

obligated service; 

• During which the student was 

unable to obtain orders releasing the 

student from a period of service in the 

uniformed services before the expiration 

of the five-year period and the inability 

to obtain those orders was through no 

fault of the student; or 

• That is performed by a member of 

the Armed Forces (including the 

National Guard and Reserves) who is— 

» Ordered to or retained on active 

duty under section 688, 12301(a), 

12301(g), 12302, 12304, or 12305 of 

Title 10, U.S.C., or under section 331, 

332, 359, 360, 367, or 712 of Title 14, 

U.S.C.; 

» Ordered to or retained on active 

duty (other than for training) under any 

provision of law because of a war or 

national emergency declared by the 

President or the Congress; 

» Ordered to active duty (other than 

for training) in support of an operational 

mission for which personnel have been 

ordered to active duty under section 

12304 of Title 10, U.S.C.; 

» Odered to active duty in support of 

a critical mission or requirement of the 

Armed Forces (including the National 

Guard or Reserve); or 

» Called into Federal service as a 

member of the National Guard under 

chapter 15 of Title 10, U.S.C., or section 

12406 of Title 10, U.S.C. 

An affected servicemember must, 

upon the completion of a period of 

service in the uniformed services, notify 

the institution of his or her intent to 

return to the institution not later than 

three years after the completion of the 

period of service. However, a student 

who is hospitalized for or convalescing 

from an illness or injury incurred in or 

aggravated during the performance of 

service in the uniformed services must 

notify the institution of his or her intent 

to return to the institution not later than 

two years after the end of the period that 

is necessary for recovery from such 

illness or injury. A student who fails to 

apply for readmission within the 

required period does not automatically 

forfeit eligibility for readmission to the 

institution, but is subject to the 

institution’s established leave of 

absence policy and general practices. 

A student who submits an application 

for readmission to an institution must 

provide to the institution 

documentation to establish that: 

• The student has not exceeded the 

specified service limitations; and 

• The student’s eligibility for 

readmission has not been terminated. 


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An institution may not delay or 

attempt to avoid a readmission of a 

student under this section by 

demanding documentation that does not 

exist, or is not readily available, at the 

time of readmission. 

A student’s eligibility for readmission 

to an institution under this section by 

reason of such student’s service in the 

uniformed services terminates upon the 

occurrence of any of the following 

events: 

• A separation of such person from 

the Armed Forces (including the 

National Guard and reserves) with a 

dishonorable or bad conduct discharge; 

• A dismissal of such person 

permitted under section 1161(a) of Title 

10, U.S.C.; or 

• A dropping of such person from the 

rolls pursuant to section 1161(b) of Title 

10, U.S.C. 

Current Regulations: None. 

Proposed Regulations: 

General 

Section 668.18(a) would include the 

general requirements of the statute that 

an institution may not deny readmission 

to a servicemember, but must readmit 

the servicemember with the same 

academic status as the student had 

when the student was last admitted to 

the institution. The proposed 

regulations would clarify that the 

requirements of this section also apply 

to a student who was admitted to an 

institution, but did not begin attendance 

because of service in the uniformed 

services. The proposed regulations 

would specify that the institution must 

promptly readmit a student, and would 

define ‘‘promptly readmit’’ as 

readmitting a student into the next class 

or classes in the student’s program 

unless the student requests a later date 

of admission, or unusual circumstances 

require the institution to admit the 

student at a later date. 

Section 668.18(a)(2)(iii) would specify 

that to readmit a person with the ‘‘same 

academic status’’ means that the 

institution admits the student: 

• To the same program to which he 

or she was last admitted by the 

institution or, if that program is no 

longer offered, the program that is most 

similar, unless the student requests or 

agrees to admission to a different 

program; 

• At the same enrollment status that 

the student last held at the institution, 

unless the student requests or agrees to 

admission at a different enrollment 

status; 

• With the same number of credit 

hours or clock hours completed 

previously by the student, unless the 

student is readmitted to a different 

program to which the completed credit 

hours or clock hours are not 

transferable; 

• With the same academic standing 

(e.g., with the same satisfactory 

academic progress status) the student 

previously had; 

• If the student is readmitted to the 

same program, for the first academic 

year in which the student returns, by 

assessing the same institutional charges 

that the student was or would have been 

assessed for the academic year during 

which the student left the institution; 

• If the student is admitted to a 

different program, and for subsequent 

academic years for a student admitted to 

the same program, by assessing no more 

than the institutional charges that other 

students in the program are assessed for 

that academic year; and 

• Waiving charges for equipment 

required in lieu of equipment the 

student paid for when the student was 

previously enrolled. 

In the case of a student who is not 

prepared to resume the program at the 

point where he or she left off or will not 

be able to complete the program, 

§ 668.18(a)(2)(iv) would require the 

institution to make reasonable efforts to 

help the student become prepared or to 

enable the student to complete the 

program including, but not limited to, 

providing refresher courses at no extra 

cost and allowing the student to retake 

a pretest at no extra cost. The institution 

would not be required to readmit the 

student if, after reasonable efforts by the 

institution, the student is still not 

prepared to resume the program at the 

point where he or she left off, or is still 

unable to complete the program. In 

addition, an institution would not be 

required to readmit a student if there are 

no reasonable efforts the institution can 

take to prepare the student to resume 

the program, or to enable the student to 

complete the program. 

The proposed regulations would 

define ‘‘reasonable efforts’’ as actions 

that do not place an undue hardship on 

the institution. An ‘‘undue hardship’’ 

would be defined as requiring 

significant difficulty or expense to the 

institution. An institution would carry 

the burden to prove by a preponderance 

of the evidence that the student is not 

prepared to resume the program with 

the same academic status at the point 

where the student left off, or that the 

student will not be able to complete the 

program. 

Section 668.18(a)(3) would make clear 

that the requirements of this section 

apply to an institution even if that 

institution has undergone a change of 

ownership since the student ceased 

attendance. 

Finally, § 668.18(a)(4) would make 

clear that the provisions of this section 

supersede any State law or other 

requirement that reduce, limit, or 

eliminate any right or benefit provided 

by this section. 

Service in the Uniformed Services 

Section 668.18(b) would delineate 

what service in the uniformed services 

means for purposes of this section. This 

section would expand upon the 

statutory language to clarify that service 

in the uniformed services includes 

active duty for training and full-time 

National Guard duty under Federal 

authority (i.e., not National Guard 

service under authority of State law). In 

addition, the regulations would specify 

that qualifying service must be for more 

than 30 consecutive days under a call or 

order to active duty of more than 30 

consecutive days. 

Readmission Procedures 

Section 668.18(c) would list the 

statutory conditions under which an 

institution must readmit a 

servicemember. In addition, 

§ 668.18(c)(2)(i) would require an 

institution to designate one or more 

offices for the purpose of receiving 

advance notice from students of their 

absence from the institution 

necessitated by service in the uniformed 

services, and notice from students of an 

intent to return to the institution. 

Section 668.18(c)(1)(i) would make clear 

that advance notice must be provided by 

the student as far in advance as is 

reasonable under the circumstances. 

However under § 668.18(c)(2)(ii) and 

(iii), such notice would not need to 

follow any particular format, nor would 

a student have to indicate as part of the 

notice whether the student intends to 

return to the institution. Also, the 

regulations would make clear that an 

institution may not set a brightline 

deadline for submission of any such 

notice, but must judge the timeliness of 

submission by the facts of a particular 

case. As such notice may be provided by 

an appropriate officer of the Armed 

Forces, § 668.18(c)(2)(iv) would clarify 

who an ‘‘appropriate officer’’ is. The 

regulations would also provide that a 

student’s notice of intent to return may 

be provided orally or in writing and 

would not need to follow any particular 

format. Section 668.18(c)(1)(ii) would 

make clear that the cumulative length of 

all previous absences by an affected 

student from the institution would 

include only the time the student 

spends actually performing service in 

the uniformed services. A period of 

absence from the institution before or 

after performing service in the 


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Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 42387 

uniformed services would not count 

against the five year limit. For example, 

after the individual completes a period 

of service in the uniformed services, he 

or she is provided a certain amount of 

time to return to the institution. The 

period between completing the 

uniformed service and returning to the 

institution would not count against the 

five-year limit. 

Exceptions to Advance Notice 

Section 668.18(d) would restate the 

statutory language for exceptions to 

advance notice. 

Cumulative Length of Absence 

Section 668.18(e) would restate the 

statutory types of service that are not 

included in the cumulative length of the 

student’s absence, including a brief 

description of the types of services 

referenced in titles 10 and 14 of the 

United States Code. 

Notification of Intent to Reenroll 

Section 668.18(f) would restate the 

statutory provision providing that a 

student who fails to apply for 

readmission within the required periods 

does not automatically forfeit eligibility 

for readmission to the institution, but is 

subject to the institution’s established 

leave of absence policy and general 

practices. 

Documentation 

Section 668.18(g) would list the 

documentation required by the statute 

that a student must submit with an 

application for readmission. The 

regulations would list several specific 

types of documentation that satisfy the 

statutory documentation requirements, 

making clear that the types of 

documentation available or necessary 

will vary from case to case. 

Termination of Readmission Eligibility 

Section 668.18(h) would list the 

circumstances listed in the statute under 

which a student’s eligibility for 

readmission to an institution would be 

terminated, including a brief description 

of the types of circumstances referenced 

in title 10 of the United States Code. 

Reasons: The regulations are amended 

to reflect the changes made by the 

HEOA. The statutory provisions for 

readmission of servicemembers to 

institutions of higher education were 

based on the provisions of the 

Uniformed Services Employment and 

Reemployment Rights Act (USERRA) 

(38 U.S.C. 4301–4334), which 

established the process for 

servicemembers to return to 

employment after serving on active 

duty. Therefore, in developing these 

proposed regulations, the Department 

sought to be as consistent as possible 

with the regulations implementing the 

USERRA. The Department believes that 

the purpose of these provisions, as with 

the USERRA, is to minimize the 

disruption to the lives of persons 

performing service in the uniformed 

services, allowing a student to return to 

an institution without penalty for 

having left because of service in the 

uniformed services. 

General 

Because the statute refers to 

‘‘readmission’’ of servicemembers, the 

Department believes that the statute was 

intended to apply not just to a student 

who began attendance at an institution 

and left because of service in the 

uniformed services, but also to a student 

who was admitted to an institution, but 

did not begin attendance because of 

service in the uniformed services. 

In line with the goal of minimizing 

the disruption to the lives of persons 

performing service in the uniformed 

services and to prevent an institution 

from unduly delaying an individual’s 

readmission, the proposed regulations 

would require an institution to 

promptly readmit a student, and would 

define ‘‘promptly readmit’’ as 

readmitting a student into the next class 

or classes in the student’s program 

unless the student requests a later date 

of admission, or unusual circumstances 

require the institution to admit the 

student at a later date. If, for example, 

an institution must make efforts to help 

the student become prepared to resume 

the program, and such efforts would not 

be completed in time for the student to 

begin the next class, a later date of 

admission would be justified. 

The proposed requirements in 

§ 668.18(a)(2)(iii) for readmitting a 

person with the ‘‘same academic status’’ 

are consistent with USERRA regulations 

(20 CFR 1002.191 and 1002.192), which 

require an employer to employ a 

returning servicemember in the same 

position he or she left, so as to not 

penalize the individual for having left to 

serve in the uniformed services. The 

Department has chosen to focus only on 

the readmission of a servicemember by 

requiring that, if the student is 

readmitted to the same program, for the 

first academic year in which the student 

returns, the institution would have to 

assess the same institutional charges 

that the student had or would have been 

assessed for the academic year during 

which the student left the institution. 

However, this protection would not 

apply to subsequent years, when the 

institution could assess the institutional 

charges that other students in the 

program are assessed for that academic 

year. 

To address concerns voiced by nonFederal negotiators that the regulations 

would not allow an institution to 

readmit a student with a different 

academic status, even if the student 

wanted the change, the regulations 

would make clear that the institution 

may admit the student with a different 

academic status if the student requests 

or agrees to the change. 

Consistent with USERRA regulations 

(20 CFR 1002.198) which require an 

employer to make reasonable efforts, if 

necessary, to help an employee become 

qualified for the reemployment position, 

§ 668.18(a)(2)(iv) would require the 

institution to make reasonable efforts, if 

necessary, to help a returning student 

become prepared or to enable the 

student to complete the program 

including, but not limited to, providing 

refresher courses at no extra cost and 

allowing the student to retake a pretest 

at no extra cost. The Department 

believes requiring an institution to make 

such an effort is in line with the goal of 

allowing a student to return to an 

institution without penalty for having 

left because of service in the uniformed 

services. To ensure that such an effort 

does not unduly burden the institution 

financially or administratively, the 

proposed regulations would use the 

USERRA regulations definitions of 

‘‘reasonable efforts’’—actions that do 

not place an undue hardship on the 

institution and ‘‘undue hardship’’— 

requiring significant difficulty or 

expense to the institution. 

In addition, as USERRA regulations 

(20 CFR 1002.139) provide an employer 

with a degree of flexibility in meeting its 

reemployment obligations by not 

requiring an employer to reemploy an 

individual under very limited 

circumstances, so would 

§ 668.18(a)(2)(iv)(B) provide institutions 

with some flexibility to not readmit a 

student if, (1) after reasonable efforts by 

the institution, the student is still not 

prepared to resume the program at the 

point where he or she left off, or is still 

unable to complete the program; or (2) 

if there are no reasonable efforts the 

institution can take to prepare the 

student to resume the program, or to 

enable the student to complete the 

program. Consistent with USERRA 

regulations (20 CFR 1002.139), an 

institution would carry the burden to 

prove by a preponderance of the 

evidence that the student is not 

prepared to resume the program with 

the same academic status at the point 

where the student left off, or that the 

student will not be able to complete the 

program. 


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Consistent with the Department’s 

practice of treating an institution that 

has undergone a change of ownership as 

the same institution, § 668.18(a)(3) 

provides that the requirements of this 

section would apply to an institution 

even if that institution has undergone a 

change of ownership since the student 

ceased attendance. 

As with USERRA regulations (20 CFR 

1002.7(b)), § 668.18(a)(4) would make 

clear that the provisions of this section 

supersede any State law or other 

requirement that reduces, limits, or 

eliminates any right or benefit provided 

by this section. This provision would 

make it possible, for example, to 

readmit a servicemember into a class for 

a semester even if that class was at the 

maximum enrollment level set by the 

institution’s State. The preemption only 

applies when it is the admission of the 

returning servicemember that would be 

prevented by the State law or other 

requirement. The institution is expected 

to take other steps to come into 

compliance with the State law or other 

requirements for future periods of 

enrollment. As with USERRA 

regulations, these regulations would not 

supersede, nullify or diminish any 

Federal or State law (including any local 

law or ordinance), contract, agreement, 

policy, plan, practice, or other matter 

that establishes an individual’s right or 

benefit that is more beneficial than, or 

is in addition to, a right or benefit 

provided under the HEA. 

Service in the Uniformed Services 

Section 668.18(b) clarifies that service 

in the uniformed services includes 

active duty for training, because it is a 

form of active duty in the Armed Forces. 

Consistent with USERRA regulations 

(20 CFR 1002.57), service in the 

uniformed services would include fulltime National Guard duty under Federal 

authority, but not National Guard 

service under authority of State law, 

which is not considered to be service in 

the uniformed services for purposes of 

these provisions. As explained in 20 

CFR 1002.57 of the USERRA 

regulations: 

The National Guard has a dual status. It is 

a Reserve component of the Army, or, in the 

case of the Air National Guard, of the Air 

Force. Simultaneously, it is a State military 

force subject to call-up by the State Governor 

for duty not subject to Federal control, such 

as emergency duty in cases of floods or riots. 

National Guard members may perform 

service under either Federal or State 

authority, but only Federal National Guard 

service is covered by USERRA. 

In addition, the regulations would 

specify that qualifying service must be 

for more than 30 consecutive days under 

a call or order to active duty of more 

than 30 consecutive days. This would 

exclude shorter periods of Reserve and 

National Guard service from being 

added together to trigger this provision. 

Readmission Procedures 

Section 668.18(c) would list the 

statutory conditions under which an 

institution must readmit a 

servicemember. An institution would be 

required to designate one or more 

offices for the purpose of receiving 

advance notice from students of their 

absence from the institution 

necessitated by service in the uniformed 

services, and notice from students of an 

intent to return to the institution to ease 

administrative burden for institutions 

and to assist students in directing their 

notice to the appropriate individuals. 

Also, consistent with USERRA 

regulations (20 CFR 1002.85), to ease 

administrative burden for institutions, a 

student would have to provide notice 

that he or she is leaving as far in 

advance as is reasonable under the 

circumstances. However, also consistent 

with USERRA regulations (20 CFR 

1002.85 and 1002.88), to ensure that a 

student’s advance notice is not subject 

to unreasonable requirements by an 

institution: (1) Such notice would not 

need to follow any particular format; (2) 

an institution would have to judge the 

timeliness of submission by the facts of 

a particular case; and (3) a student 

would not have to indicate as part of the 

notice whether the student intends to 

return to the institution. For the same 

reason, the regulations would also 

provide that a student’s notice of intent 

to return may be provided orally or in 

writing and would not need to follow 

any particular format (consistent with 

USERRA regulations section 1002.118). 

Consistent with USERRA regulations 

(20 CFR 1002.100), § 668.18(c)(1)(ii) 

would make clear that the cumulative 

length of all previous absences by an 

affected student from the institution 

would include only the time the student 

spends actually performing service in 

the uniformed services. This means that 

the time a servicemember spent away 

from the institution either before, after, 

or in-between periods of service in the 

uniformed services does not count 

toward the maximum amount of time 

the servicemember may spend in active 

service before losing the protections in 

this provision. 

Documentation 

The list of specific types of 

documentation was included to assist 

students and institutions in identifying 

documents that satisfy the statutory 

documentation requirements. 

Non-Title IV Revenue Requirement 

(90/10) 

Institutional Eligibility and Sanctions 

(§§ 668.14(b)(16), 668.28(c), and 

668.13(c)) 

Statute: The HEOA moved the 

requirement that a proprietary 

institution derive at least 10 percent of 

its revenue from sources other than title 

IV, HEA program funds from the 

institutional eligibility provisions in 

section 102(b) of the HEA to the general 

provisions in section 487(d) of the HEA. 

As a result, a proprietary institution that 

does not satisfy the 90/10 revenue 

requirement for a fiscal year, no longer 

loses its eligibility to participate in the 

title IV, HEA programs. Instead, as 

provided in section 487(d)(2) of the 

HEA, the institution’s participation 

becomes provisional for two fiscal years. 

If the institution does not satisfy the 

90/10 revenue requirement for two 

consecutive fiscal years, it loses its 

eligibility to participate in the title IV, 

HEA programs for at least two fiscal 

years. 

During the two fiscal years the 

institution is provisionally certified 

because it failed to satisfy the 90/10 

revenue requirement for a fiscal year, 

the institution’s provisional certification 

terminates on the expiration date of its 

program participation agreement or the 

date it loses its eligibility to participate 

because it failed to satisfy the 

requirement for two consecutive fiscal 

years. To regain eligibility, the 

institution must demonstrate that it 

complied with all eligibility and 

certification requirements under section 

498 of the HEA for a minimum of two 

fiscal years after the fiscal year it 

became ineligible. 

Current Regulations: The regulations 

in 34 CFR 600.5(a)(8), (e), (f), and (g), 

identify the requirements for, and 

consequences of failing, the 90/10 

revenue provision. 

Proposed Regulations: In general, the 

proposed regulations would remove all 

of the 90/10 revenue provisions from 34 

CFR 600.5 and relocate those 

provisions, as amended by the HEOA, to 

subpart B of part 668. Accordingly, 

proposed § 668.14(b)(16) would amend 

the program participation agreement to 

specify that a proprietary institution 

must derive at least 10 percent of its 

revenue for each fiscal year from 

sources other than title IV, HEA 

program funds. If an institution does not 

satisfy the 90/10 requirement, the 

proposed regulations in § 668.28(c) 

would incorporate the statutory 

consequences and require the 

institution to notify the Secretary no 

later than 45 days after the end of its 


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fiscal year that it failed the 90/10 

requirement. Also, and in keeping with 

the provisional certification requirement 

in the statute, § 668.13(c) would be 

amended by adding proposed paragraph 

(1)(ii) to provide that a proprietary 

institution’s certification automatically 

becomes provisional if it fails the 90/10 

requirement for any fiscal year. 

Reasons: The proposed regulations 

reflect the statutory requirements. The 

provision under which an institution 

would notify the Department that it 

failed the 90/10 requirement no later 

than 45 after its fiscal year, parallels, but 

would shorten, the current 90-day 

timeframe in 34 CFR 600.5(f). An 

institution at risk of failing the 90/10 

requirement is expected to monitor its 

revenue sources and amounts carefully 

throughout the year, and is expected to 

know if it failed shortly after the end of 

its fiscal year. Consequently, we believe 

that 45 days provides ample time for the 

institution to confirm on-going 

assessments of its compliance with this 

requirement. 

Calculating the Revenue Percentage 

(§ 668.28(a)) 

Statute: Section 487(d) of the HEA 

prescribes the requirements that 

proprietary institutions must follow in 

calculating their 90/10 revenue 

percentage. Under these requirements, 

an institution must— 

(1) Use the cash basis of accounting, 

except for certain loans made by the 

institution; 

(2) Consider as revenue only those 

funds generated by the institution from: 

• Tuition, fees, and other institutional 

charges for students enrolled in eligible 

programs. 

• Activities conducted by the 

institution that are necessary for the 

education and training of the 

institution’s students, if those activities 

are conducted on campus or at a facility 

under the control of the institution, are 

performed under the supervision of a 

member of the institution’s faculty, and 

are required to be performed by all 

students in a specific educational 

program at the institution. 

• Funds paid by a student, or on 

behalf of a student by a party other than 

the institution, for an education or 

training program that is not eligible for 

title IV, HEA program funds, if the 

program is approved or licensed by the 

appropriate State agency, is accredited 

by an accrediting agency recognized by 

the Department, or provides an 

industry-recognized credential or 

certification; 

(3) Presume that any title IV, HEA 

program funds are disbursed or 

delivered to or on behalf of a student 

will be used to pay the student’s tuition, 

fees, or other institutional charges, 

regardless of whether the institution 

credits those funds to the student’s 

account or pays those funds directly to 

the student, except to the extent that the 

student’s tuition, fees, or other 

institutional charges are satisfied by: 

• Grant funds provided by nonFederal public agencies or private 

sources independent of the institution; 

• Funds provided under a contractual 

arrangement with a Federal, State, or 

local government agency for the purpose 

of providing job training to low-income 

individuals who are in need of that 

training; 

• Funds used by a student from 

savings plans for educational expenses 

established by or on behalf of the 

student and which qualify for special 

tax treatment under the Internal 

Revenue Code of 1986; or 

• Institutional scholarships. 

(4) Include institutional aid as 

revenue to the school only as follows: 

• For loans made by the institution 

on or after July 1, 2008 and prior to July 

1, 2012, the net present value (NPV) of 

those loans made by the institution 

during the applicable institutional fiscal 

year accounted for on an accrual basis 

and estimated in accordance with 

generally accepted accounting 

principles and related standards and 

guidance, if the loans are bona fide as 

evidenced by enforceable promissory 

notes; are issued at intervals related to 

the institution’s enrollment periods; and 

are subject to regular loan repayments 

and collections. 

• For loans made by the institution 

on or after July 1, 2012, only the amount 

of loan repayments received during the 

applicable institutional fiscal year, 

excluding repayments on loans made 

and accounted for which the NPV was 

used. 

• For scholarships provided by the 

institution, only those scholarships 

provided by the institution in the form 

of monetary aid or tuition discounts 

based upon the academic achievements 

or financial need of students, disbursed 

during each fiscal year from an 

established restricted account, and only 

to the extent that funds in that account 

represent designated funds from an 

outside source or from income earned 

on those funds. 

(5) For each student who receives a 

loan on or after July 1, 2008, and prior 

to July 1, 2011, that is authorized under 

section 428H of the HEA or that is a 

Federal Direct Unsubsidized Stafford 

Loan, treat as revenue received by the 

institution from sources other than 

funds received under this title, the 

amount by which the disbursement of 

the loan received by the institution 

exceeds the limit on such loan in effect 

on the day before the date of enactment 

of the Ensuring Continued Access to 

Student Loans Act (ECASLA) of 2008; 

and 

(6) Exclude from revenues— 

• The amount of funds the institution 

received under part C (Federal Work 

Study), unless the institution used those 

funds to pay a student’s institutional 

charges. 

• The amount of funds the institution 

received under subpart 4 of part A 

(LEAP, SLEAP, or GAP). 

• The amount of funds provided by 

the institution as matching funds for a 

title IV, HEA program. 

• The amount of title IV, HEA 

program funds provided by the 

institution that are required to be 

refunded or returned. 

• The amount charged for books, 

supplies, and equipment, unless the 

institution includes that amount as 

tuition, fees, or other institutional 

charges. 

Current regulations: The regulations 

in 34 CFR 600.5 address many, but not 

all, of the statutory requirements for 

calculating the 90/10 revenue 

percentage. However, as discussed 

previously, the regulations in this 

section would be removed. 

Section 668.23(d)(4) requires a 

proprietary institution to report its 

90/10 ratio in a footnote to its audited 

financial statements. 

Proposed regulations: Proposed 

§ 668.28(a) incorporates the statutory 

requirements. 

We propose to implement the 

statutory provision relating to counting 

revenue from non-title IV eligible 

programs by providing that these 

programs may prepare students to take 

an examination for an industryrecognized credential or certificate 

issued by an independent third-party, 

provide training needed for students to 

maintain State licensing requirements, 

or provide additional training for 

practitioners. 

An institution would continue to 

report the revenue percentages in a 

footnote to its audited financial 

statements, but the revisions in 

proposed § 668.23(d)(4) would require 

the institution to identify in that 

footnote the non-Federal and Federal 

revenues by category. 

With regard to institutional loans for 

which an NPV would be calculated, the 

proposed regulations establish that 

institutional loans would have to be 

credited in-full to the student’s account, 

be evidenced by standalone repayment 

agreements between students and the 

institution, and be separate from 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
42390 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

enrollment contracts signed by students. 

Loans made to students by third parties 

but subsequently acquired by the 

institution would not meet this 

definition of institutional loans, and 

could not be included in either of the 

NPV calculations. Moreover, all 

payments from the institution to acquire 

the loans would be counted against any 

non-Federal revenues from the loan 

proceeds the institution received. 

For the purpose of counting revenue 

from loan funds in excess of the loan 

limits in effect prior to ECASLA, we 

propose that institutions count the 

excess amount on a payment-period 

basis. 

Finally, in proposed appendix C to 

subpart B of part 668 we illustrate how 

an institution calculates its 90/10 

revenue percentage. 

Reasons: To a large extent, the 

proposed regulations adopt the statutory 

provisions which, also to a large extent, 

reflect current regulations and practice. 

However, we are incorporating 

suggestions from some of the nonFederal negotiators in implementing 

three of the new provisions for nonFederal sources of revenue that may be 

included in the 90/10 calculation. First, 

we would identify the types of non-title 

IV eligible programs from which an 

institution could count, as revenue, the 

funds paid for students taking those 

programs. We believe this eliminates 

much of the ambiguity regarding 

whether the revenue from a non-title IV 

eligible program offered by an 

institution could be counted for 90/10 

purposes. Second, for purposes of the 

90/10 calculation, we are identifying the 

elements that will distinguish an 

institutional loan from other types of 

student account receivables. Third, the 

regulations would allocate the excess 

loan funds that are treated as nonFederal revenue to each payment period 

to simplify the 90/10 calculation. This 

will minimize some complexities that 

may result if the excess funds were only 

counted after all of the pre-ECASLA 

loan funds were provided to a student, 

particularly if the disbursements for a 

loan are received by an institution in 

two different fiscal years. 

An institution would continue to 

report its 90/10 ratio in a footnote 

included with the institution’s annual 

audited financial statements. Given the 

additional revenues that may be 

counted as non-Federal funds in this 

calculation, and that Federal funds may 

be treated as non-Federal funds (i.e., 

loan amounts in excess of the preECASLA limits), we believe it is 

necessary for the institution to report in 

that footnote the amounts of the 

revenues, by category, derived from 

Federal and non-Federal funds that are 

included in its 90/10 calculation. The 

certified public accountant that prepares 

the institution’s audited financial 

statements will be required to review 

that information and test the 

institution’s calculation. On a case by 

case basis, Department staff will 

continue to review the accountant’s 

work papers when more information is 

needed to determine if the calculation is 

correct. 

Some of the non-Federal negotiators 

suggested that the regulations permit 

tuition discounts given to students be 

counted for 90/10 purposes, since 

tuition discounts are mentioned in the 

HEA, along with monetary aid provided 

to students, as types of scholarships 

provided by a proprietary institution. 

The HEA also requires that these 

scholarships be disbursed to a student’s 

account from an established restricted 

account at the institution holding funds 

from an outside source, or income 

earned on those funds. The proposed 

regulations implement the statutory 

provision that institutions may pay 

scholarships with tuition discounts that 

are credited from such restricted 

accounts. 

Net Present Value (NPV) (§ 668.28(c)) 

Statute: For loans an institution 

makes to students on or after July 1, 

2008 and prior to July 1, 2012, section 

497(d)(1)(D)(i) of the HEA requires an 

institution to count as revenue the NPV 

of the loans it makes during a fiscal 

year. 

Current regulations: There are no 

current regulations regarding NPV, 

however 34 CFR 600.5(d)(3)(i) allows an 

institution to count as revenue the 

amount of loan repayments it receives 

on institutional loans during its fiscal 

year. 

Proposed regulations: In proposed 

§ 668.28(b), the Department defines the 

NPV as the sum of the discounted cash 

flows Rt

/(1+i)t. The variable ‘‘i’’ is the 

discount rate, which would, for 90/10 

purposes, be the most recent annual 

inflation rate. The variable ‘‘t’’ is the 

time or period of the cash flow, in years, 

starting from the time the loan entered 

repayment. The variable ‘‘Rt

’’ is the net 

cash flow at time or period t. 

If the institution’s loans made during 

the fiscal year have substantially the 

same repayment period, the proposed 

regulations provide that an institution 

may use that repayment period for those 

loans to set the range of values of 

variable ‘‘t’’ in the NPV formula. 

However, if an institution’s loans have 

different repayment periods, the 

institution would group the loans by 

repayment period and use the 

repayment period for each group to set 

the range of values for variable ‘‘t’’. For 

each group of loans, as applicable, the 

institution would multiply the total 

annual payments due on the loans by 

the institution’s collection rate (the total 

amount of payments collected divided 

by the total amount of payments due). 

The resulting amount is the cash flow 

used for variable ‘‘R’’ in each period ‘‘t’’ 

for each group of loans for which an 

NPV is calculated. Proposed appendix C 

to subpart B of part 668 illustrates this 

NPV calculation. 

As a simpler alternative to performing 

the NPV calculation, the proposed 

regulations allow an institution the 

option to use 50 percent of the total 

amount of loans it made during the 

fiscal year as the NPV. However, if the 

institution chooses to use this 

alternative, it may not sell any of the 

associated loans until they have been in 

repayment for at least two years. 

Reasons: The Department would 

implement the statutory requirement to 

establish the net present value of an 

institution’s loans by adopting the 

formula—NPV = sum of the discounted 

cash flows Rt

/(1+i)t. However, this 

formula is generally intended for, and 

used primarily, in making investment 

decisions. Nevertheless, the discount 

rate ‘‘i’’ is the rate of return that could 

be earned on an investment in the 

financial markets with similar risk, or 

more generally, the rate of return sought 

or expected by the investor. Translating 

this for 90/10 purposes, the formula 

determines the NPV of institutional 

loans by taking into consideration the 

discounted value caused by inflation. 

The proposed regulations define the 

expected cash flows represented by 

variable ‘‘R’’ to be the annual payments 

due on the loans (i.e., the scheduled 

payments) multiplied by the 

institution’s loan collection rate (the 

total amount of payments collected on 

loans for a fiscal year divided by the 

total amount of payments due on those 

loans for that year). In this way, the 

expected cash flows are adjusted to take 

into account loans that are not collected 

or loan payments that are not collected 

timely. The institution’s loan collection 

rate should be based on the institution’s 

own loan collection history, and may be 

a prior annual rate or historical rate 

covering several years. We seek public 

comment on other ways that an 

institution may establish a loan 

collections rate. In any case, the 

institution would need to document that 

rate and the institution’s auditor would 

examine that information as a part of the 

institution’s annual financial statement 

audit. 


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With regard to the alternative 

provision that allows an institution to 

use 50 percent of the total amount of 

loans it made during the fiscal year as 

the NPV, we propose this option as an 

administrative convenience for 

institutions that either prefer a simpler 

method to establish the NPV or who do 

not need the additional non-Federal 

revenues that might be counted if the 

formula were used. This option 

provides a conservative, simple 

calculation for the NPV that is intended 

to be a fair compromise in exchange for 

choosing not to perform the NPV 

calculations. However, if the institution 

chooses this option, it may not sell the 

loans associated with the 50 percent 

calculation until those loans have been 

in repayment for two years. As provided 

in section 487(d)(1)(D)(i)(III) of the HEA, 

institutional loans are subject to regular 

loan repayment and collections. The 

regular NPV formula would use the 

institution’s own collection rate, but the 

alternative formula would not. To make 

sure that alternative formula 

institutional loans are legitimate, the 

institution may not sell them until they 

have been in repayment for two years. 

This will permit the Department, or 

another oversight entity, to determine 

whether these loans were subject to 

regular loan repayment and collection 

as required by the statute. Moreover, we 

wish to avoid an outcome where an 

institution would sell the loans in the 

short term for less than the 50 percent 

amount it claimed for 90/10 purposes. 

Institutional Plans for Improving the 

Academic Program (§ 668.43(a)) 

Statute: As part of the required 

information on its academic program 

that an institution must make available 

to prospective and enrolled students 

under section 485(a) of the HEA, the 

HEOA adds the requirement that an 

institution make available any plans the 

institution has for improving that 

academic program. 

Current Regulations: Section 

668.43(a)(5) requires an institution to 

make readily available to enrolled and 

prospective students information on the 

academic program of the institution, 

including (1) the current degree 

programs and other educational and 

training programs; (2) the instructional, 

laboratory, and other physical facilities 

that relate to the academic program; and 

(3) the institution’s faculty and other 

instructional personnel. 

Proposed Regulations: Section 

668.43(a)(5) would be amended to add 

to the information on the academic 

program of the institution that an 

institution must make readily available 

to enrolled and prospective students 

any plans by the institution for 

improving the academic program of the 

institution. An institution would be 

allowed to determine what a ‘‘plan’’ is, 

including when a plan becomes a plan. 

Reasons: The regulations are amended 

to reflect the changes made by the 

HEOA. 

Peer-to-Peer File Sharing and 

Copyrighted Material (§§ 668.14(b) and 

668.43(a)) 

Statute: The HEOA added a new 

requirement to section 487 of the HEA 

(Program Participation Agreement) 

under which an institution must certify 

that it has developed plans to effectively 

combat the unauthorized distribution of 

copyrighted material (including through 

the use of a variety of technology-based 

deterrents) and will, to the extent 

practicable, offer alternatives to illegal 

downloading or peer-to-peer 

distribution of intellectual property, as 

determined by the institution in 

consultation with the chief technology 

officer or other designated officer of the 

institution. 

In addition, as part of the required 

information an institution must make 

available to prospective and enrolled 

students, the HEOA added new 

subparagraph (P) to section 485(a)(1) of 

the HEA to require a description of 

institutional policies and sanctions 

related to the unauthorized distribution 

of copyrighted material. This 

description includes (1) an annual 

disclosure that explicitly informs 

students that unauthorized distribution 

of copyrighted material, including peerto-peer file sharing, may subject the 

students to civil and criminal liabilities; 

(2) a summary of the penalties for 

violation of Federal copyright laws; and 

(3) the institution’s policies with respect 

to unauthorized peer-to-peer file 

sharing, including disciplinary actions 

that are taken against students who 

engage in unauthorized distribution of 

copyrighted materials using the 

institution’s information technology 

system. 

Current Regulations: Section 

668.41(c) requires an institution to 

provide to enrolled students an annual 

notice containing a list and brief 

description of the consumer information 

it must disclose and the procedures for 

obtaining this consumer information. 

The term notice is defined in § 668.41(a) 

as a means of notification of the 

availability of information an institution 

is required to disclose on a one-to-one 

basis through a direct individual notice 

to each enrolled student. This notice 

must be made through an appropriate 

mailing or publication, including direct 

mailing through the U.S. Postal Service, 

campus mail or electronic mail. Posting 

on Internet or Intranet Web sites does 

not constitute notice. If the institution 

discloses the consumer information 

listed in § 668.41(c) by posting the 

information on a Web site, it must 

include in the notice the exact 

electronic address at which the 

information is posted, and a statement 

that the institution will provide a paper 

copy of the information on request. 

Section 668.41(a) defines a 

prospective student as an individual 

who has contacted an eligible 

institution requesting information 

concerning admission to that 

institution. 

Proposed Regulations: 

Program Participation Agreement (PPA) 

Section 668.14(b)(30)(i) would 

implement section 487(a)(29)(A) of the 

HEA to require an institution, as a 

condition of participation in a title IV, 

HEA program, to agree that it has 

developed and implemented written 

plans to effectively combat the 

unauthorized distribution of 

copyrighted material by users of the 

institution’s network without unduly 

interfering with the educational and 

research use of the network. 

An institution would have to include 

in its plan: 

• The use of one or more technologybased deterrents; 

• Mechanisms for educating and 

informing its community about 

appropriate versus inappropriate use of 

copyrighted material. The written plan 

would include the information 

contained in proposed § 668.43(a)(10). 

These mechanisms could include any 

additional information and approaches 

determined by the institution to 

contribute to the effectiveness of the 

plan, such as including pertinent 

information in student handbooks, 

honor codes, and codes of conduct in 

addition to e-mail and/or paper 

disclosures. 

• Procedures for handling 

unauthorized distribution of 

copyrighted material, including 

disciplinary procedures; and 

• Procedures for periodically 

reviewing the effectiveness of the plans 

to combat the unauthorized distribution 

of copyrighted materials by users of the 

institution’s network using relevant 

assessment criteria. It would be left to 

each institution to determine what 

relevant assessment criteria are. 

The regulations would make clear that 

no particular technology measures are 

favored or required for inclusion in an 

institution’s plans, and each institution 

retains the authority to determine what 

its particular plans for compliance will 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
42392 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

be, including those that prohibit content 

monitoring. 

Proposed § 668.14(b)(30)(ii) would 

implement section 487(a)(29)(B) of the 

HEA by requiring that an institution, in 

consultation with the chief technology 

officer or other designated officer of the 

institution, to the extent practicable, 

offer legal alternatives to illegal 

downloading or otherwise acquiring 

copyrighted material, as determined by 

the institution. The proposed 

regulations would also require that 

institutions (1) be required to 

periodically review the legal 

alternatives for downloading or 

otherwise acquiring copyrighted 

material and (2) make the results of the 

review available to their students 

through a Web site or other means. 

Consumer Information 

Proposed § 668.43(a)(10) would 

implement section 485(a)(1)(P) of the 

HEA. Information regarding 

institutional policies and sanctions 

related to the unauthorized distribution 

of copyrighted material would be 

included in the list of institutional 

information provided upon request to 

prospective and enrolled students. This 

information would be required to (1) 

explicitly inform its students that 

unauthorized distribution of 

copyrighted material, including peer-topeer file sharing, may subject a student 

to civil and criminal liabilities; (2) 

include a summary of the penalties for 

violation of Federal copyright laws; and 

(3) describe the institution’s policies 

with respect to unauthorized peer-topeer file sharing, including disciplinary 

actions that are taken against students 

who engage in illegal downloading or 

unauthorized distribution of 

copyrighted materials using the 

institution’s information technology 

system. The Department will work with 

representatives of copyright holders and 

institutions to develop a summary of the 

civil and criminal penalties for violation 

of Federal copyright laws to include as 

part of the Federal Student Aid 

Handbook that an institution may use to 

meet this requirement. 

As current § 668.41(c) requires an 

institution to provide to enrolled 

students an annual notice containing a 

list and brief description of the 

consumer information it must disclose 

and the procedures for obtaining this 

consumer information, an institution 

would be required to add to this list the 

fact that it must make readily available 

information regarding institutional 

policies and sanctions related to the 

unauthorized distribution of 

copyrighted material. Consistent with 

the current definition of notice in 

§ 668.41(a), an institution would be 

required to provide this annual notice 

on a one-to-one basis through a direct 

individual notice to each enrolled 

student. This notice must be made 

through an appropriate mailing or 

publication, including direct mailing 

through the U.S. Postal Service, campus 

mail or electronic mail. Posting on 

Internet or Intranet Web sites does not 

constitute notice. If the institution 

discloses the consumer information by 

posting the information on a Web site, 

it must include in the notice the exact 

electronic address at which the 

information is posted, and a statement 

that the institution will provide a paper 

copy of the information on request. 

The current definition of prospective 

student in § 668.41(a) would be used— 

i.e., an individual who has contacted an 

eligible institution requesting 

information concerning admission to 

that institution. 

Reasons: The regulations are amended 

to reflect the changes made by the 

HEOA. 

These proposed regulations reflect the 

work of a subcommittee of 

representatives of institutions, digital 

content owners, and Department staff 

that was formed by the larger committee 

to address copyright issues. The 

members of the subcommittee were able 

to successfully reconcile vastly 

disparate viewpoints on several 

contentious parts of the statute to 

develop proposed regulatory language 

that was then presented to, and 

tentatively agreed upon by, the full 

committee. The Department has chosen 

to preserve the compromises made by 

all sides on this issue by including the 

proposed regulatory language on which 

tentative agreement was reached. The 

Department believes that the proposed 

regulations provide enough specificity 

to emphasize that institutions must take 

seriously their role in combating 

unauthorized distribution of 

copyrighted materials by users of their 

network, while providing enough 

flexibility to institutions in how they 

combat any unauthorized distribution to 

acknowledge the differences among 

institutions and their networks, as well 

as variances in the scope of the problem 

of unauthorized distribution of 

copyrighted material. 

Program Participation Agreement 

The Department believes the intent of 

the statute was to require institutions to 

actively combat the unauthorized 

distribution of copyrighted material. 

Accordingly, § 668.14(b)(30)(i) would 

require an institution to agree as part of 

its program participation agreement that 

it not only has developed a plan to do 

so, but has also implemented that plan. 

In recognition that there must be a 

balance between network security and 

the functioning of a network for its 

intended use, § 668.14(b)(30)(i) would 

also make clear that an institution is not 

required to take measures to effectively 

combat the unauthorized distribution of 

copyrighted material that would unduly 

interfere with the educational and 

research use of the network. The 

Department believes that all institutions 

can achieve this balance, given the 

flexibility provided by the proposed 

regulations allowing individual 

institutions to determine how to best 

effectively combat such unauthorized 

distribution. Institutions should not 

view this provision as a justification for 

not effectively combating the 

unauthorized distribution of 

copyrighted material. Although there 

was some discussion of requiring an 

institution to effectively combat the 

unauthorized distribution of 

copyrighted material by only student 

users of the institution’s network, the 

regulatory language on which tentative 

agreement was reached would apply the 

requirement more broadly to ‘‘users.’’ 

This approach ensures that institutions 

will be more likely to deter and prevent 

downloads of copyrighted material by 

employees and members of the public 

that may use computers at a school 

library, for example, and also allow 

them to identify illegal downloads being 

made by students who are not accessing 

the computer systems using their 

student accounts. The Department 

believes that this approach meets the 

intent of the statute that institutions 

secure their networks from misuse by 

individuals who are given access to the 

networks. 

In recognition of the diversity among 

institutions and how technology is 

continuously evolving, 

§ 668.14(b)(30)(i)(A) would leave it up 

to an institution’s discretion to 

determine how many and what type of 

technology-based deterrents it uses as a 

part of its plan—although every 

institution must employ at least one. 

The Statement of Managers in the 

Conference Report for the HEOA 

discusses this issue on pages 547–549 

(H. R. Conf. Rep. No. 110–803, at 547– 

549 (2008)), and provides context and 

clarification to this requirement as 

follows: 

Experience shows that a technology-based 

deterrent can be an effective element of an 

overall solution to combat copyright 

infringement, when used in combination 

with other internal and external solutions to 

educate users and enforce institutional 

policies. 


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Effective technology-based deterrents are 

currently available to institutions of higher 

education through a number of vendors. 

These approaches may provide an institution 

with the ability to choose which one best 

meets its needs, depending on that 

institution’s own unique characteristics, such 

as cost and scale. These include bandwidth 

shaping, traffic monitoring to identify the 

largest bandwidth users, a vigorous program 

of accepting and responding to Digital 

Millennium Copyright Act (DMCA) notices, 

and a variety of commercial products 

designed to reduce or block illegal file 

sharing. 

Rapid advances in information technology 

mean that new products and techniques are 

continually emerging. Technologies that are 

promising today may be obsolete a year from 

now and new products that are not even on 

the drawing board may, at some point in the 

not too distant future, prove highly effective. 

The Conferees intend that this Section be 

interpreted to be technology neutral and not 

imply that any particular technology 

measures are favored or required for 

inclusion in an institution’s plans. The 

Conferees intend for each institution to retain 

the authority to determine what its particular 

plans for compliance with this Section will 

be, including those that prohibit content 

monitoring. The Conferees recognize that 

there is a broad range of possibilities that 

exist for institutions to consider in 

developing plans for purposes of complying 

with this Section. 

The Department believes that some 

institutions may be able to effectively 

combat the unauthorized distribution of 

copyrighted material using only one of 

the four types of technology-based 

deterrents (bandwidth shaping, traffic 

monitoring, accepting and responding to 

DMCA notices, or a commercial product 

designed to reduce or block illegal file 

sharing) while others may need to 

employ a combination of such 

deterrents. 

The additional proposed components 

of an effective plan in 

§ 668.14(b)(30)(i)(B) and (C) reflect 

general agreement by the committee that 

a plan to effectively combat the 

unauthorized distribution of 

copyrighted material by users of the 

institution’s network should include an 

educational component and a 

description of the institution’s 

procedures for handling the 

unauthorized distribution of 

copyrighted material to provide a 

deterrent by ensuring that users are 

made aware that the unauthorized 

distribution of copyrighted material is 

illegal, what actions constitute illegal 

distribution of copyrighted material, 

and the potential penalties for the 

unauthorized distribution of 

copyrighted materials. 

The final component of the plan, in 

proposed § 668.14(b)(30)(i)(D), would 

require an institution to periodically 

review its plan to evaluate whether it is 

working. One of the most controversial 

aspects of the proposed regulations was 

the evaluation of whether a plan was 

effectively combating the unauthorized 

distribution of copyrighted material. 

There was extensive discussion over 

how a plan should be reviewed to 

determine its effectiveness, and how 

much discretion institutions should be 

given in this area. Ultimately, tentative 

agreement was reached on a provision 

requiring an institution to periodically 

review its plan using relevant 

assessment criteria, permitting an 

institution discretion to determine the 

most appropriate criteria. As the 

specifics of a plan will be determined by 

an institution, the Department believes 

that the institution is in the best 

position to determine the appropriate 

criteria to assess its plan. In some cases, 

appropriate assessment criteria might be 

process-based, so long as the 

institution’s information system 

information does not contradict such a 

determination. Such process-based 

criteria might look at whether the 

institution is following best practices, as 

laid out in guidance worked out 

between copyright owners and 

institutions or as developed by similarly 

situated institutions that have devised 

effective methods to combat the 

unauthorized distribution of 

copyrighted material. In other cases, 

assessment criteria might be outcomebased. The criteria might look at 

whether there are reliable indications 

that a particular institution’s plans are 

effective in combating the unauthorized 

distribution of copyrighted material. 

Among such indications may be ‘‘before 

and after’’ comparisons of bandwidth 

used for peer-to-peer applications, low 

recidivism rates, and reductions (either 

in absolute or in relative numbers) in 

the number of legitimate electronic 

infringement notices received from 

rights holders. The institution is 

expected to use the assessment criteria 

it determines are relevant to evaluate 

how effective its plans are in combating 

the unauthorized distribution of 

copyrighted materials by users of the 

institution’s networks. 

In addition to reflecting the statute 

requiring that institutions, to the extent 

practicable, offer legal alternatives to 

illegal downloading or otherwise 

acquiring copyrighted material, 

proposed § 668.14(b)(30)(ii) reflects 

general agreement that institutions 

should periodically review the legal 

alternatives, and make available the 

results of the review to its students 

through a Web site or other means, as 

such legal alternatives are likely to 

change over time. Based on the 

discussions of the subcommittee, the 

Department anticipates that individual 

institutions, national associations, and 

commercial entities will develop and 

maintain up-to-date lists that may be 

referenced for compliance with this 

provision. 

Consumer Information 

For consistency, § 668.43(a)(10) 

would implement the consumer 

information portion of the statute within 

the existing framework and using the 

definitions found in current regulations. 

The committee discussed whether the 

statutorily required annual disclosure 

should be a one-to-one notice provided 

directly to each student by the 

institution. However, as the statute 

requires that most institutional 

information in this section of the HEA 

instead be made readily available to 

prospective and enrolled students, the 

information regarding institutional 

policies and sanctions related to the 

unauthorized distribution of 

copyrighted material would be handled 

in the same manner (i.e., included in the 

list of institutional information that an 

institution must make available 

pursuant to § 668.43). The Department 

believes that the required disclosure of 

institutional policies and sanctions 

related to the unauthorized distribution 

of copyrighted materials can be met 

without imposing the burden of a oneto-one notification on institutions. 

There was some discussion by the 

committee of extending the statutory 

provision to require an institution to 

disclose the required information to 

employees of the institution in addition 

to students. As the statute does not 

require disclosure of this information to 

employees, this would not be mandated 

in the regulations. The Department 

believes that employees of an institution 

are more likely to be aware that 

unauthorized distribution of 

copyrighted material is illegal and does 

not believe that the benefit of such 

disclosure would justify the potential 

added burden to the institution. 

However, we encourage institutions to 

make such information available to 

employees and the general public if they 

believe it will be beneficial. 

Consumer Information (§§ 668.41 and 

668.45) 

Statute: Section 485(a) of the HEA 

lists the types of information that 

institutions are required to make 

available to prospective and enrolled 

students. Section 488 of the HEOA 

expands the list of consumer 

information requirements in section 

485(a)(1) of the HEA, and from that 


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42394 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

expanded list, Team V discussed a 

number of the requirements, including 

the following: 

• The placement and types of 

employment obtained by graduates of 

the institution’s degree or certificate 

programs; 

• The types of graduate and 

professional education in which 

graduates of the institution’s four-year 

degree programs enrolled; and 

• The retention rates of the certificate 

or degree seeking, first-time, full-time, 

undergraduate students entering the 

institution. 

Note that the information required by 

section 485(a)(1) of the HEA addressing 

‘‘institutional policies and sanctions 

that relate to copyright infringements’’ 

and ‘‘the fire safety report’’ (that is 

prepared by the institution pursuant to 

section 485(i) of the HEA) is discussed 

elsewhere in this preamble. 

Section 488 of the HEOA also amends 

the calculation procedures for 

completion and graduation rates in 

section 485(a)(4) of the HEA that 

address situations in which students 

leave school to serve in the Armed 

Forces, on official church missions, or 

with a recognized foreign aid service of 

the Federal Government. Section 488 of 

the HEOA also adds section 485(a)(7) to 

the HEA, which directs an institution to 

disaggregate its completion and 

graduation rate information by gender, 

by each major racial and ethnic 

subgroup, and by recipients of several 

types of Federal title IV aid—if the 

number of students in each such 

subgroup or with each such status is 

sufficient to yield statistically reliable 

information and reporting this 

information will not reveal personally 

identifiable information about an 

individual student. 

Current Regulations: Section 668.41 

lists the types of information that an 

institution must make available to 

enrolled and prospective students (and 

in some cases, employees, prospective 

employees, prospective student-athletes, 

the public, and others). This 

information includes: 

• Financial assistance available to 

students; 

• The institution’s completion and 

graduation rate; 

• An annual security report 

(including institutional security policies 

and crime statistics that are described in 

§ 668.46); 

• The completion and graduation 

rates for student-athletes; 

• Athletic program participation rates 

and financial support data; and 

• Institutional information (including 

the cost to attend the institution, its 

academic programs and faculty, etc.). 

Section 668.45 specifies how an 

institution must prepare the annual 

completion or graduation rate for its 

certificate- or degree-seeking, full-time, 

undergraduate students. It also 

addresses how an institution must 

prepare a transfer-out rate if the 

institution’s mission includes providing 

substantial preparation for students to 

enroll in another institution. An 

institution must make its completion or 

graduation rate, and if applicable, its 

transfer-out rate available by July 1 

following the 12-month period ending 

August 31 during which 150 percent of 

the normal time for completion or 

graduation has elapsed for the students 

on which the institution bases its 

calculations. 

Proposed Regulations: In proposed 

§ 668.41(d), we would add retention rate 

information, placement rate 

information, and information on the 

types of graduate and professional 

education in which graduates of the 

institution’s four-year degree programs 

enroll, to the types of information that 

an institution must provide to its 

enrolled and prospective students. 

When reporting its retention rate, 

proposed § 668.41(d) would require an 

institution to disclose the institution’s 

retention rate as reported to the 

Integrated Postsecondary Education 

Data System (IPEDS). We have adopted 

IPEDS’ definition of ‘‘retention rate’’ in 

proposed § 668.41(a) for this purpose. 

For its placement information, the 

institution may use various sources of 

information (such as State data systems, 

surveys, or other relevant sources). 

However, if it calculates an actual 

placement rate, it must disclose that 

rate. For the types of graduate and 

professional education in which 

graduates of the institution’s four-year 

degree programs enroll, the institution 

also may use various sources of 

information (such as State data systems, 

surveys, or other relevant sources). For 

both placement information and the 

types of graduate and professional 

education in which graduates of the 

institution’s four-year degree programs 

enroll, the institution would have to 

identify the source of the information it 

discloses, as well as the time frames and 

methodology associated with that 

information. 

In addressing the requirement for an 

institution to make certain information 

available to students or prospective 

students (and sometimes the public), we 

have removed the words ‘‘on request’’ in 

proposed § 668.41(d) and (g)(1)(i). 

Similar words have been deleted from 

proposed § 668.43(a) and (b). 

Under proposed § 668.45, an 

institution’s completion and graduation 

rate information must be disaggregated 

by gender, by each major racial and 

ethnic subgroup, and by whether or not 

the institution’s students received 

certain types of Federal student aid. The 

disaggregation by receipt of aid is 

categorized by whether students were— 

• Recipients of a Federal Pell Grant; 

• Recipients of a Federal Family 

Education Loan or a Federal Direct Loan 

(other than an Unsubsidized Stafford 

Loan); and 

• Recipients of neither a Federal Pell 

Grant nor a Federal Family Education 

Loan or a Federal Direct Loan (other 

than an Unsubsidized Stafford loan). 

The institution would report its 

completion and graduation rate 

information in a disaggregated manner 

only if the number of students in each 

category is sufficient to yield 

statistically reliable information, and 

doing so would not reveal personally 

identifiable information about an 

individual student. Otherwise, the 

institution would note that it enrolled 

too few students in the affected category 

to disclose the information with 

confidence and confidentiality. 

In calculating its completion and 

graduation rate, an institution normally 

counts students as completing or 

graduating if they have completed or 

graduated by the end of the 12-month 

period ending August 31 during which 

150 percent of the normal time for 

completion or graduation from the 

program has elapsed. However, as 

proposed, if 20 percent or more of the 

certificate- or degree-seeking, full-time, 

undergraduate students at the 

institution left school to serve in the 

Armed Forces, to serve on official 

church missions, or to serve with a 

foreign aid service of the Federal 

Government (such as the Peace Corps), 

then the institution may recalculate the 

completion or graduation rate of those 

students by adding to the 150 percent 

time frame they normally have to 

complete or graduate, the time period 

the students were not enrolled due to 

their service in one of these specified 

categories. 

Reasons: The proposed changes in 

§§ 668.41 and 668.45 would implement 

statutory changes to section 485 of the 

HEA made by section 488 of the HEOA. 

As specified in § 668.41(d), institutions 

are allowed to use various sources to 

compile information on placements and 

on the types of graduate and 

professional education in which 

graduates of the institution’s four-year 

degree programs enroll. A number of the 

non-Federal negotiators noted that this 

latitude to compile information from 

various sources should not be 

compromised or otherwise qualified by 


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Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 42395 

requiring institutions to disclose 

methodologies used in compiling the 

data. However, because the information 

can come from any number of sources 

and may not be comparable to similarlooking information at another 

institution, the Department believes it is 

important that the institution disclose 

the source of the information, as well as 

the time frames and methodology 

associated with it, when the institution 

discloses that information to its enrolled 

and prospective students. This will 

allow the student and prospective 

student recipients of the information to 

make more informed decisions 

regarding their educational choices. 

Since the statute is silent about 

requiring an institution to calculate an 

actual placement rate, or to disseminate 

that rate if it calculates one, a number 

of non-Federal negotiators argued that 

the regulations should remain silent in 

that regard. However, the Department 

believes that disclosing placement rate 

information would be beneficial to 

students and prospective students. If the 

institution makes available placement 

rates that it has, students and especially 

prospective students will be able to 

make more informed decisions about 

enrollment in various programs at the 

institution. Therefore, when a 

placement rate is voluntarily calculated 

by the institution, proposed § 668.41(d) 

would require the institution to disclose 

that rate along with other placement 

information. 

The words ‘‘on request’’ (or ‘‘upon 

request’’) were removed from 

§§ 668.41(d), 668.41(g)(1)(i), and 

668.43(a) and (b) because the 

Department believes that they do not 

reflect how institutions currently 

operate in terms of making various types 

of information available to their 

students, prospective students, and 

sometimes the public. While it is true 

that an individual may not receive 

information unless he or she asks about 

it, institutions, in essence, are 

considered to ‘‘make their information 

available’’ by having it on a Web site or 

in printed material without regard to 

whether any one individual requests it 

or not. When an individual inquires 

about the information in question, the 

institution would direct him or her to 

the appropriate source. 

The requirement in proposed § 668.45 

for an institution to disaggregate its 

completion and graduation rate 

information by gender, by each major 

racial and ethnic subgroup, and by 

receipt or nonreceipt of certain types of 

Federal student aid is from section 485 

of the HEA. All of the negotiators agreed 

that the Department should use the 

IPEDS racial and ethnic categories for 

this purpose, but several of them raised 

the issue of how institutions should 

disaggregate the information by receipt 

or nonreceipt of student aid. For 

example, should a student be 

considered to have received aid if the 

student received it at any time during 

his enrollment, or only during the 

student’s first year, or for some other 

period of time? The Department and the 

non-Federal negotiators ultimately 

agreed that the question of receipt of aid 

for this determination should be based 

on whether the student received the aid 

during the time period when the student 

entered the institution that is associated 

with the cohort of students the student 

is a part of for purposes of the 

institution’s calculation of completion 

or graduation, retention, and transfer 

out rates. For institutions with a 

predominate number of programs based 

on semesters, trimesters, or quarters, 

this would be the fall term of the year 

the student’s cohort of certificate- or 

degree-seeking, first-time, full-time 

undergraduate students first entered the 

institution. For other institutions, this 

would be the period between September 

1 of one year and August 31 of the 

following year when the student’s 

cohort of certificate- or degree-seeking, 

first-time, full-time undergraduate 

students first entered the institution. 

It is possible that an institution could 

have a significant number of its students 

interrupt their education to serve in the 

Armed Forces, on church missions, or 

with a foreign aid service of the Federal 

Government (e.g., the Peace Corps). 

Were that to occur, the normal 

calculation of the institution’s 

completion or graduation rate would 

result in a misleadingly smaller rate. 

Thus, consistent with section 485 of the 

HEA, when 20 percent or more of the 

certificate- or degree-seeking, full-time, 

undergraduate students at the 

institution leave school to serve in one 

of the ways listed in § 668.45(d)(1)(i) 

through (iii), the institution may 

recalculate its completion or graduation 

rate to take that fact into consideration. 

That is, when the institution calculates 

its completion or graduation rate, it may 

add the time period the students were 

not enrolled due to their service time to 

the 150 percent time frame that students 

normally have to complete or graduate. 

Campus Safety Provisions 

Hate Crime Reporting (§ 668.46(c)(3)) 

Statute: Section 488(e)(1)(c) of the 

HEOA amended section 485(f) of the 

HEA to expand the list of hate crimes 

that institutions must report to the 

Department to include larceny-theft, 

simple assault, intimidation, and 

destruction, damage, or vandalism of 

property. 

Current Regulations: Section 

668.46(c)(3) of the Department’s 

regulations currently requires 

institutions to report as hate crimes the 

occurrence of criminal homicide, sex 

offenses, robbery, aggravated assault, 

burglary, motor vehicle theft, arson, and 

any other crime involving bodily injury 

reported to local police agencies or a 

campus security authority if there is 

manifest evidence that the victim was 

intentionally selected on the basis of 

certain characteristics. 

Proposed Regulations: We propose to 

revise § 668.46(c)(3) to add the crimes of 

‘‘larceny-theft,’’ ‘‘simple assault,’’ 

‘‘intimidation,’’ and ‘‘destruction/ 

damage/vandalism of property’’ to the 

crimes that must be reported in hate 

crime statistics. Additionally, we would 

update the definitions of the terms 

‘‘Weapons: carrying, possessing, etc.,’’ 

‘‘Drug abuse violations,’’ and ‘‘Liquor 

law violations’’ in appendix A to 

subpart D of 34 CFR part 668, which are 

excerpted from the Federal Bureau of 

Investigation’s Uniform Crime Reporting 

Program, to reflect changes made by the 

FBI. 

Reasons: The proposed regulations 

would implement the statutory changes 

made by the HEOA by using the FBI’s 

Hate Crime Data Collection Guidelines 

in the Uniform Crime Reporting 

Handbook (available at http:// 

www.fbi.gov/ucr/hatecrime.pdf) to 

define the hate crimes to be reported. 

Definition of Test (§ 668.46(a)) 

Statute: Section 488(e)(1)(D) of the 

HEOA amended section 485(f) of the 

HEA to require institutions to include a 

statement of policy regarding their 

emergency response and evacuation 

procedures in the annual security 

report. As part of this policy statement 

an institution must describe how it will 

test its emergency response and 

evacuation procedures on an annual 

basis. Current Regulations: Section 

668.46(a) contains definitions that apply 

to the requirements for institutional 

security policies and the reporting of 

crime statistics. 

Proposed Regulation: Under proposed 

§ 668.46(a), we would define test for 

purposes of the emergency response and 

evacuation procedures as ‘‘regularly 

scheduled drills, exercises, and 

appropriate follow-through activities, 

designed for assessment and evaluation 

of emergency plans and capabilities.’’ 

Reasons: This definition would clarify 

the meaning of test for the purposes of 

complying with the statutory 

requirement that an institution test its 

emergency response and evacuation 


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42396 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

procedures. Following a 

recommendation from some of the nonFederal negotiators, the definition of the 

term was drawn from the Emergency 

Management Accreditation Program 

(EMAP) Standard, which was designed 

to serve as a set of standards defining a 

quality emergency management program 

and was collaboratively developed by 

numerous organizations involved in 

emergency management and response. 

Annual Security Report—Emergency 

Response and Evacuation Procedures 

(§ 668.46(b)) 

Statute: Section 485(f) of the HEA 

outlines the elements that must be 

included in an institution’s annual 

security report. Section 488(e)(1)(D) of 

the HEOA added to section 485(f) of the 

HEA a requirement that an institution 

must include a statement of policy 

regarding emergency response and 

evacuation procedures in its annual 

security report. This statement must 

describe how the institution will 

immediately notify the campus 

community upon the confirmation of a 

significant emergency or dangerous 

situation involving an immediate threat 

to the health or safety of students or 

staff occurring on the campus, unless 

the notification will compromise efforts 

to contain the emergency. 

Current Regulations: Section 

668.46(b) delineates the elements that 

must be included in an institution’s 

annual security report. 

Proposed Regulations: Proposed 

§ 668.46(b)(13) would require 

institutions to include a statement of 

policy regarding their emergency 

response and evacuation procedures in 

the annual security report. Institutions 

must satisfy this requirement beginning 

with the annual security report 

distributed by October 1, 2010. 

Reasons: These new provisions 

implement the new statutory 

requirement. We would require this 

statement of policy for the October 1, 

2010 report because it is the first report 

due after these regulations would go 

into effect. As institutions are expected 

to make a good faith effort to comply 

with the statute in the absence of 

regulations, institutions should be 

gathering this information in 

preparation for the 2010 report. 

Timely Warning and Emergency 

Notification (§ 668.46(e)) 

Statute: Section 485(f)(3) of the HEA 

requires institutions to make timely 

warnings to the campus community on 

crimes considered to be a threat to 

students and employees that are 

reported to campus security or local 

police agencies. Section 488(e)(1)(D) of 

the HEOA added section 485(f)(1)(J) to 

the HEA to require institutions to have 

a policy for emergency notification of 

the campus community upon the 

confirmation of a significant emergency 

or dangerous situation involving an 

immediate threat to the health or safety 

of students or staff occurring on the 

campus, unless the notification will 

compromise efforts to contain the 

emergency. 

Current Regulations: Section 

668.46(e) describes the situations in 

which an institution must send a timely 

warning to the campus community to 

report on crimes that are considered by 

the institution to represent a threat to 

students and employees. 

Proposed Regulations: Proposed 

§ 668.46(e)(3) would clarify the 

difference between the existing timely 

warning requirement and the new 

requirement for an emergency 

notification policy. While a timely 

warning must be issued in response to 

crimes specified in § 668.46(c)(1) and 

(3), an emergency notification is 

required in the case of an immediate 

threat to the health or safety of students 

or employees occurring on campus, as 

described in proposed § 668.46(g). The 

proposed language would clarify that an 

institution that follows its emergency 

notification procedures is not required 

to issue a timely warning based on the 

same circumstances; however, the 

institution must provide adequate 

follow-up information to the community 

as needed. 

Reasons: Many of the non-Federal 

negotiators requested that the 

regulations clearly explain the 

difference between a timely warning 

circumstance and an emergency 

notification circumstance. The 

emergency notification requirement 

applies to a wider range of threats, such 

as crimes, gas leaks, highly contagious 

viruses, or hurricanes. Many nonFederal negotiators also asked that the 

Department make it clear that 

institutions may satisfy a timely 

warning requirement with an emergency 

notification in appropriate 

circumstances to avoid inundating 

students and employees with messages 

that may become ineffective. On the 

other hand, some non-Federal 

negotiators also expressed concern that 

providing insufficient information could 

jeopardize the safety of the campus 

community, for instance, in a situation 

in which the emergency or investigation 

is still developing. 

To address these concerns, we are 

proposing to require an institution that 

uses its emergency notification system 

to provide follow-up information to the 

community as needed. The phrase ‘‘as 

needed’’ was used to address the wide 

variety of threats that might occur. 

Annual Security Report—Emergency 

Response and Evacuation Procedures 

(§ 668.46(g)) 

Statute: Section 485(f)(1)(J) of the 

HEA, added by the HEOA, requires 

institutions to include a statement of 

policy regarding emergency response 

and evacuation procedures in the 

annual security report. This policy 

statement must describe how the 

institution will immediately notify the 

campus community upon the 

confirmation of a significant emergency 

or dangerous situation involving an 

immediate threat to the health or safety 

of students or staff occurring on the 

campus, unless the notification will 

compromise efforts to contain the 

emergency. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.46(g) would set out the following 

elements that an institution must 

include in its statement of policy 

describing its emergency response and 

evacuation procedures in its annual 

security report: 

• Procedures to immediately notify 

the campus community upon the 

confirmation of a significant emergency 

or dangerous situation involving an 

immediate threat to the health or safety 

of students or employees occurring on 

the campus. 

• A description of the process that the 

institution will use to (1) confirm that 

there is a significant emergency or 

dangerous situation, (2) determine the 

appropriate segment or segments of the 

campus community to receive a 

notification, (3) determine the content of 

the notification, and (4) initiate the 

notification system. 

• A statement that the institution 

will, without delay, and taking into 

account the safety of the community, 

determine the content of the notification 

and initiate the notification system, 

unless issuing the notification will, in 

the professional judgment of responsible 

authorities, compromise efforts to assist 

a victim or to contain, respond to, or 

otherwise mitigate the emergency. 

• A list of the titles of the persons or 

organizations responsible for carrying 

out the actions in proposed 

§ 668.46(g)(2). 

• Procedures for disseminating 

emergency information to the larger 

community. 

• Procedures for testing its emergency 

response and evacuation procedures on 

at least an annual basis. Such tests 

could be announced or unannounced, 

would be publicized in conjunction 

with at least one test per calendar year, 


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and would be documented, including a 

description of the exercise, the date, 

time, and whether it was announced or 

announced. 

Reasons: The proposed regulations 

are intended to ensure that institutions 

have sufficiently prepared for an 

emergency situation on campus, that 

they are testing these procedures to 

identify and improve weaknesses, and 

that they have considered how they will 

inform the campus community and 

other individuals, such as parents. 

While the non-Federal negotiators 

generally agreed with these goals, some 

of them expressed concern that 

institutions need to have flexibility to 

appropriately respond to situations 

while maintaining a level of 

accountability in the system. 

To allow appropriate flexibility in the 

system, the Department has not 

specified that institutions use a 

particular mode of communication, but 

notes that institutions may and should 

have multiple methods of 

communication with the campus 

community. For example, in the case of 

a gas leak, an institution may determine 

that the most effective mode of 

communication is a fire alarm, whereas 

in other situations it might be best to 

use a text message system. The 

Department encourages institutions to 

consider overlapping means of 

communication in case one method fails 

or malfunctions. Additionally, 

institutions have the flexibility to alert 

only the appropriate segment or 

segments of the population that they 

determine to be at risk; for instance, 

only notifying individuals in the 

building where there is a gas leak. This 

provision is intended to guard against 

the possibility that too many emergency 

notifications would lead some members 

of the campus community to begin to 

ignore the notices, thus dampening its 

response to a potentially dangerous 

situation. Institutions also have the 

flexibility to list the organizations that 

may be best equipped to respond to 

different situations, for instance, the 

health department may best respond to 

an outbreak of a virus. Further, 

institutions would have a great deal of 

flexibility in designing tests of the 

emergency notification system, as a test, 

as defined in the proposed changes to 

§ 668.46(a), could be done in many 

ways, such as by a tabletop exercise or 

a test conducted on a campus-wide 

scale. 

Parents and students affected by the 

shootings at the Virginia Polytechnic 

Institute and State University in 2007 

attended part of the negotiations and 

discussed their experiences and 

opinions regarding how the Department 

should regulate in this area. They 

emphasized the need for institutions to 

keep parents and families informed in 

the case of an emergency. Some nonFederal negotiators suggested that 

institutions be encouraged to use Web 

sites, radio, and television stations to 

keep the larger community apprised of 

emergency situations. Additionally, in 

the case of an institution that uses a 

texting system to relay emergency 

notification information, several nonFederal negotiators suggested allowing 

parents to sign up to receive texts along 

with students and employees. 

Some non-Federal negotiators were 

concerned that an institution could 

misinterpret these proposed regulations 

to mean that, as part of its procedures, 

it should disclose all of the details of 

how it would respond to any of a variety 

of situations. The negotiators noted that 

this approach could potentially hamper 

law enforcement efforts to address or 

investigate an emergency. In response, 

we note that the proposed regulations 

would not require institutions to 

publish in great detail how they would 

respond to specific emergencies. 

Finally, many non-Federal negotiators 

raised concerns that institutions 

consider the needs of students with 

disabilities in developing emergency 

response and evacuation policies and 

procedures. The Department expects an 

institution to consider the diverse needs 

of all members of the campus 

community in developing or revising an 

emergency plan. 

Definition of On-Campus Student 

Housing Facility (§ 668.41(a)) 

Statute: Section 488(g) of the HEOA 

added section 485(j) to the HEA to 

require an institution that maintains an 

on-campus student housing facility to 

establish, for students who reside in oncampus student housing, a missing 

student notification policy that allows 

students to confidentially register a 

contact person, and procedures to notify 

that contact person if the student is 

missing for more than 24 hours. 

Current Regulations: Section 

668.41(a) contains definitions that apply 

to 34 CFR part 668, subpart D. 

Proposed Regulations: The proposed 

regulations would add a definition of 

the term on-campus student housing 

facility to § 668.41(a) to mean a 

dormitory or other residential facility 

for students that is located on an 

institution’s campus, as defined in 

§ 668.46(a). 

Reasons: The proposed definition 

would be added to clarify what is meant 

by on-campus student housing facility 

and to link the meaning of ‘‘on-campus’’ 

to the existing regulatory definition of 

campus in § 668.46(a), which is used for 

crime reporting under § 668.46(c). For 

the purposes of the fire safety reporting 

requirements under proposed § 668.49 

and the missing student notification 

policies and procedures requirements 

under proposed § 668.46, a student 

housing facility that is on property 

owned by an institution, even if the 

building is owned and maintained by a 

student organization or other party, 

would be considered an on-campus 

student housing facility. If neither the 

property nor the building is owned by 

the institution, then the student housing 

facility would not be covered by this 

definition. While on-campus student 

housing facility is used in the statute in 

reference to the new fire safety and 

missing student notification provisions, 

the definition of on-campus student 

housing facility would also apply to the 

existing crime reporting requirements in 

§ 668.46. The Department believes this 

approach will minimize confusion and 

create less administrative burden for 

institutions. 

Annual Security Report—Missing 

Student Notification Policy (§ 668.46(b) 

and (h)) 

Statute: Section 485(f) of the HEA, as 

amended by the section 488(g) of the 

HEOA, requires institutions that 

maintain an on-campus student housing 

facility to establish, for students who 

reside in an on-campus student housing 

facility, both a missing student 

notification policy that allows students 

to confidentially register a contact 

person, and procedures for notifying a 

missing student’s contact person. 

Current Regulations: Section 

668.46(b) delineates the elements that 

must be included in an institution’s 

annual security report. 

Proposed Regulations: The proposed 

changes in § 668.46(b)(14) would 

require an institution to include its 

missing student notification policy and 

procedures in its annual security report. 

This would be required beginning with 

the annual security report distributed by 

October 1, 2010. 

Reasons: Some non-Federal 

negotiators felt that an institution 

should have the flexibility to decide 

how and when to distribute its missing 

student policies and procedures. The 

Department considered this suggestion 

but agrees with other negotiators who 

argued that having the information in 

the annual security report would enable 

students and parents to more easily 

compare policies across institutions. We 

propose to require that these policies 

and procedures be included in the 

institution’s annual security report, but 

note that institutions may also distribute 


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these policies and procedures at other 

appropriate times, such as during a new 

student orientation. This policy 

statement must be included in the 

report that must be distributed by 

October 1, 2010 because it is the first 

report due after these regulations go into 

effect. Institutions must make a good 

faith effort to comply with the statute in 

the absence of regulations; therefore, 

institutions should be gathering this 

information in preparation for the 2010 

report. 

Missing Student Notification Policy 

(§ 668.46(h)) 

Statute: Section 485 of the HEA, as 

amended by section 488 of the HEOA, 

requires an institution that maintains an 

on-campus student housing facility to 

establish, for students who reside in oncampus student housing, a missing 

student notification policy that includes 

notifying students that they can 

confidentially register an individual to 

be contacted if the student is 

determined to be missing. The statute 

requires an institution to advise 

students who are under 18 years old and 

not emancipated that a custodial parent 

or guardian must be notified if the 

student is determined to be missing. 

Further, all students residing in an oncampus student housing facility must be 

advised that, regardless of whether they 

register a contact person, the local law 

enforcement agency will be notified in 

the event that the student is determined 

to be missing. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.46(h)(1) implements the new 

statutory requirements, specifying that 

an institution’s statement of policy 

regarding missing student notification 

for students residing in on-campus 

student housing facilities must include: 

• A list of the titles of the persons or 

organizations to which students, 

employees, or other individuals should 

report that a student has been missing 

for 24 hours; 

• A requirement that any official 

missing student report be immediately 

referred to the institution’s police or 

campus security department or to the 

local law enforcement agency with 

jurisdiction in the area; 

• The option for each student to 

identify a contact person to be notified 

if the student is determined missing by 

the institutional police or campus 

security department, or the local law 

enforcement agency; and 

• A disclosure that contact 

information will be registered and 

maintained confidentially. 

Proposed § 668.46(h)(1) would further 

require an institution to advise students 

who are under 18 and not emancipated 

that if the student is missing it will 

notify a custodial parent or guardian in 

addition to any contact person 

designated by the student. All students 

must also be advised that, regardless of 

whether they name a contact person, the 

institution must notify the local law 

enforcement agency that the student is 

missing, unless the local law 

enforcement was the entity that 

determined that the student is missing. 

Reasons: These new provisions would 

implement the statutory requirements. 

Like the existing crime reporting 

regulations and the proposed fire 

reporting regulations, these proposed 

regulations require institutions to 

include a list of the titles of the persons 

or organizations to which a student 

should be reported missing. 

These regulations provide that only 

authorized campus officials, and law 

enforcement officers in furtherance of a 

missing person investigation, may have 

access to the confidential contact 

information and that it may not be 

disclosed to others. This limit was 

proposed in order to protect the privacy 

rights and safety of the student. 

Missing Student Notification Procedures 

(§ 668.46(h)) 

Statute: Section 485 of the HEA, as 

amended by section 488(g) of the HEOA, 

requires an institution that maintains an 

on-campus student housing facility to 

establish procedures that the institution 

will follow if a student who resides in 

on-campus student housing is 

determined to be missing. The statute 

specifies time frames during which 

certain actions must occur. When a 

student is reported missing, the 

institution has 24 hours to inform the 

local law enforcement agency with 

jurisdiction in the area where the 

student has been reported missing. After 

the law enforcement agency determines 

that the student is missing, the 

institution has 24 hours to notify the 

student’s contact person, if applicable. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.46(h)(2) reflects the statutory 

requirements. 

Reasons: The proposed regulations 

reflect the new statutory requirements. 

These regulations do not preclude the 

institution from contacting the student’s 

contact person or the parent 

immediately upon determination that 

the student has been missing for 24 

hours. 

Annual Fire Safety Report (§ 668.41(e)) 

Statute: Section 488(g) of the HEOA 

amended section 485 of the HEA to 

require institutions that maintain oncampus student housing facilities to 

publish a fire safety report each year 

and provide a copy of the report to the 

Secretary. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.41(e) would provide that 

institutions that maintain an on-campus 

student housing facility must distribute 

an annual fire safety report, as described 

in proposed § 668.49(b). In addition, we 

propose to revise § 668.41(e) to create 

publication requirements for the annual 

fire safety report that are similar to the 

long-standing regulations for the annual 

security report. 

The proposed regulations would 

allow an institution to publish the 

annual security report and the annual 

fire safety report together, as long as the 

title of the document clearly states that 

it contains both the annual security 

report and the annual fire safety report. 

If an institution chooses to publish the 

reports separately, it would have to 

include information in each of the two 

reports about how to directly access the 

other report. 

Reasons: We are proposing to require 

the same distribution method for both 

the annual fire safety report and the 

annual security report to reduce 

administrative burden and to make it 

easier for students and parents to access 

the information. The Department 

believes that providing one source for 

this information best ensures that 

students and parents will find and 

review the material. Under the proposed 

regulations, institutions would have the 

flexibility to choose whether to combine 

the two reports; however, if the reports 

are combined, the title of the combined 

document must make it clear that both 

the annual fire safety report and the 

annual security report are included to 

give both reports equal emphasis and to 

clarify that the fire safety provisions are 

separate from the crime provisions. An 

institution that chooses to publish the 

reports separately must provide 

information in each report about how to 

directly access the other report to aid 

students and parents in locating and 

comparing information across 

institutions. 

Annual Fire Safety Report—Definitions 

of Terms (§ 668.49(a)) 

Statute: Section 485(i)(1) of the HEA, 

as amended by section 488(g) of the 

HEOA, specifies that the annual fire 

safety report must contain statistics 

concerning the number of fires in the 

institution’s on-campus housing 

facilities; the cause of each fire; the 

number of injuries and deaths related to 

each fire; and the value of property 

damage caused by each fire. 


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Additionally, the annual fire safety 

report must include a description of 

each on-campus student housing facility 

fire safety system and the number of 

regular mandatory supervised fire drills. 

Current Regulations: None. 

Proposed Regulations: We are 

proposing to add new § 668.49(a) to 

define the following terms relevant to 

the fire safety reporting requirements: 

• Cause of fire: The factor or factors 

that give rise to a fire. The causal factor 

may be, but is not limited to, the result 

of an intentional or unintentional 

action, mechanical failure, or act of 

nature. 

• Fire: Any instance of open flame or 

other burning in a place not intended to 

contain the burning or in an 

uncontrolled manner. 

• Fire drill: A supervised practice of 

a mandatory evacuation of a building for 

a fire. 

• Fire-related injury: Any instance in 

which a person is injured as a result of 

a fire, including an injury sustained 

from a natural or accidental cause, 

while involved in fire control, 

attempting rescue, or escaping from the 

dangers of a fire. The term ‘‘person’’ 

may include students, faculty, staff, 

visitors, firefighters, or any other 

individuals. 

• Fire-related death: Any instance in 

which a person (1) is killed as a result 

of a fire, including death resulting from 

a natural or accidental cause while 

involved in fire control, attempting 

rescue, or escaping from the dangers of 

a fire; or (2) dies within one year of 

injuries sustained as a result of a fire. 

• Fire-safety system: Any mechanism 

or system related to the detection of a 

fire, the warning resulting from a fire, or 

the control of a fire. This may include 

sprinkler systems or other fire 

extinguishing systems; fire detection 

devices; stand-alone smoke alarms; 

devices that alert one to the presence of 

a fire, such as horns, bells, or strobe 

lights; smoke-control and reduction 

mechanisms; and fire doors and walls 

that reduce the spread of a fire. 

• Value of property damage: The 

estimated value of the loss of the 

structure and contents, in terms of the 

cost of replacement in like kind and 

quantity. This estimate should include 

contents damaged by fire, and related 

damages caused by smoke, water, and 

overhaul; however, it does not include 

indirect loss, such as business 

interruption. 

Reasons: We have added these 

definitions to enable comparability 

across institutions of the statistics that 

institutions are required to report under 

section 485(i)(1) of the HEA. The 

definitions for cause of fire, fire-related 

injury, fire-related death, and value of 

property damage were drawn largely 

from the National Fire Incident 

Reporting System (NFIRS), a standard 

national reporting system used by U.S. 

fire departments to report fires and 

other incidents. The non-Federal 

negotiators recommended, and we 

agreed, that we should use the NFIRS 

definitions to remain consistent with 

definitions already used in the field. 

The definition of fire drill was 

developed to capture the HEA 

requirement that institutions report 

regular, mandatory, supervised fire 

drills. Further, the definition of fire 

safety system was developed through 

collaboration with experts in the fire 

safety field, who advised that the 

definition should include the variety of 

systems and mechanisms used to detect 

and alert someone to the presence of a 

fire, reduce the spread of fire, and 

control and reduce the amount of smoke 

from a fire. 

The committee discussed the 

definition of fire at length. Generally, 

the negotiators agreed that the critical 

elements of a reportable fire are that it 

occurs in a place not intended to 

contain the fire or involves any burning 

that is not under control. For instance, 

under these proposed regulations, a fire 

in a trash can would count as a fire for 

reporting purposes, even if the fire was 

still under control, because a trash can 

is not intended to contain a fire. A lit 

candle, by contrast, while possibly 

against the institution’s policies for 

candles in dorms, would not generally 

be considered a reportable fire, as it is 

in a place intended to contain the fire 

and is under control. However, if the 

flame from a lit candle were to spread 

and become uncontrolled, it would be 

considered a reportable fire. The 

definition of fire is also intended to 

capture situations in which there is 

burning (not necessarily an open flame) 

that might easily become a fire, such as 

a smoldering couch. Burning or other 

flames can easily become a fire, at great 

risk to students and other individuals. 

Annual Fire Safety Report—Statistics 

(§ 668.49(b) and (c)) 

Statute: Section 485(i)(1), as amended 

by section 488(g) of the HEOA, requires 

an institution to include in its annual 

fire safety report statistics on the 

number of fires and the cause of each 

fire; the number of injuries related to a 

fire that resulted in treatment at a 

medical facility; the number of deaths 

related to a fire; and the value of 

property damage caused by a fire. 

Section 485(i)(2) of the HEA requires 

that an institution report these statistics 

to the Secretary. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.49(b)(1) would require an 

institution to report the statistics that it 

submits to the Department in its annual 

fire safety report. The institution would 

have to provide data for the three most 

recent calendar years for which data are 

available. Proposed § 668.49(c) would 

delineate the statutorily required 

statistics. 

Reasons: The proposed regulations 

would implement the statutory 

requirements. The majority of the 

committee supported the position that 

institutions should report statistics for 

the three most recent calendar years to 

remain consistent with current reporting 

requirements for crime statistics under 

§ 668.46(c). Moreover, the three year 

time frame will better enable consumers 

to compare statistics across institutions 

while helping to identify trends in the 

data. This reporting requirement would 

be phased in beginning with the 

collection of statistics for calendar year 

2009 in the October 1, 2010 Annual Fire 

Safety Report. Data would be collected 

for three subsequent calendar years 

until three years are represented. The 

first report to contain the full three years 

of data would be the report due on 

October 1, 2012. 

Annual Fire Safety Report—Description 

of Policies (§ 668.49(b)) 

Statute: Section § 485(i)(1) of the 

HEA, as amended by section 488(g) of 

the HEOA, requires that, in its annual 

fire safety report, an institution must 

include a description of each on-campus 

student housing facility fire safety 

system, including fire sprinkler systems; 

the number of regular mandatory 

supervised fire drills; the institution’s 

policies on portable electrical 

appliances, smoking, and open flames; 

procedures for evacuation; fire safety 

education and training program 

policies; and plans for future 

improvements in fire safety, if 

applicable. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.49(b) would outline the elements 

that an institution must disclose in its 

annual fire safety report, including: 

• The fire statistics required by 

paragraph 485(i)(1)(A) of the HEA; 

• A description of each on-campus 

student housing facility fire safety 

system; 

• The number of fire drills held 

during the previous calendar year; 

• Policies or rules on portable 

electrical appliances, smoking, and 

open flames in student housing 

facilities; 


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42400 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

• Procedures for evacuation of 

student housing facilities in the case of 

a fire; 

• Policies on fire safety education and 

training programs provided to students, 

faculty, and staff, including a 

description of the procedures that 

students and employees should follow 

in the case of a fire; 

• For purposes of including a fire in 

the statistics in the annual fire safety 

report, a list of the titles of each person 

or organization to which students and 

employees should report that a fire has 

occurred; and 

• Plans for future improvements in 

fire safety, if determined necessary by 

the institution. 

Reasons: These proposed regulations 

would implement the statutory 

requirements for the annual fire safety 

report, and specify that an institution 

must include: (1) A description of the 

procedures that students and employees 

should follow in the case of a fire, and 

(2) procedures for reporting fires that do 

not require a call to the fire department, 

for instance, those that are discovered 

after the fact and are no longer a threat 

to safety. In response to concerns 

expressed by some negotiators that all 

fires, even those that have already been 

put out, should be included in reported 

statistics, the proposed regulations 

would require institutions to provide a 

list of the titles of each person or 

organization to which such fires should 

be reported. 

Fire Log (§ 668.49(d)) 

Statute: Section 485(i)(3) of the HEA, 

as amended by section 488(g) of the 

HEOA, requires an institution that 

maintains an on-campus student 

housing facility to maintain a log of all 

fires that occur in on-campus student 

housing facilities, including the nature, 

date, time, and general location of each 

fire. An institution must make annual 

reports to the campus community on 

such fires. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.49(d) would specify that an 

institution that maintains an on-campus 

student housing facility must maintain 

a written and easily understood fire log 

that records, by the date that the fire 

was reported, any fire that occurred in 

an on-campus student housing facility. 

The log would have to include the 

nature, date, time, and general location 

of each fire. Further, the proposed 

regulations would specify that additions 

or changes to the log must be made 

within two business days of the receipt 

of the information, and require that the 

log be available for public inspection for 

the most recent 60-day period. Any 

portion of the log older than 60 days 

must be made available within two 

business days of a request for 

inspection. Finally, the proposed 

regulations would also implement the 

statutory requirement that an institution 

make an annual report to the campus 

community on the fires recorded in the 

fire log; however, the proposed 

regulations specify that this requirement 

may be satisfied by the annual fire 

safety report described in proposed 

§ 668.49(b). 

Reasons: The proposed regulations 

would implement the statutory 

requirement that an institution record 

all reportable fires in a fire log. Many of 

the negotiators recommended that 

institutions have flexibility in 

maintaining this log. Therefore, we have 

not specified a format for the log, and 

we would allow institutions to 

determine whether to combine the 

annual report to the campus community 

on the fires in the fire log with the 

annual fire safety report. Many 

negotiators also recommended, and we 

agreed, that the fire log follow the 

requirements for the crime log. As a 

result, we have specified requirements 

for how information in the fire log 

should be updated, in accordance with 

the long-standing requirements for the 

crime log described in § 668.46(f). 

Financial Assistance for Students With 

Intellectual Disabilities 

Intellectual Disabilities 

Institutional Eligibility and Eligible 

Program (§§ 600.2, 600.4, 600.5, 600.6, 

and 668.8) 

Statute: Section 485(a)(8) of the 

HEOA added section 484(s) to the HEA 

to provide that a student with 

intellectual disabilities who enrolls in a 

comprehensive transition and 

postsecondary program is eligible to 

receive title IV, HEA program funds 

under the Federal Pell Grant, FSEOG, 

and FWS programs. Under the newly 

added provision, the student does not 

have to be a high school graduate (or 

have obtained a GED, or have passed an 

ability-to-benefit test) and does not have 

to be enrolled in a program that leads 

to a degree or certificate. 

Current Regulations: Section 600.2 

defines an educational program as a 

legally authorized postsecondary 

program of organized instruction or 

study that, in part, leads to an academic, 

professional, or vocational degree, or 

certificate, or other recognized 

educational credential. 

Under the definitions of an institution 

of higher education (§ 600.4(a)(2)), 

proprietary institution of higher 

education (§ 600.5(a)(3)), and 

postsecondary vocational institution 

(§ 600.6(a)(2)), the institution is required 

to admit as regular students, as defined 

in § 600.2, only those persons who have 

a high school diploma or its equivalent. 

In addition, in §§ 600.4(a)(4), 

600.5(a)(5), 600.6(a)(4), and the 

definition of an eligible program under 

§ 668.8(c)(1) and (d)(1)(iii), the 

institution must provide an educational 

program for which it awards a degree, 

certificate, or other recognized 

credential or that prepares students for 

gainful employment in a recognized 

occupation. 

Proposed Regulations: Proposed 

§§ 600.2 (paragraph (1)(i) of the 

definition of educational program), 

600.4(a)(4), 600.5(a)(5), and 600.6(a)(4) 

would provide that an institution may 

provide a comprehensive transition and 

postsecondary program for students 

with intellectual disabilities. In 

addition, proposed § 668.8(n) would 

define a comprehensive transition and 

postsecondary program as an eligible 

program if it is approved by the 

Secretary. 

Reasons: The proposed regulations 

would implement the statutory 

requirements by making it clear that an 

institution does not jeopardize its 

participation in the title IV, HEA 

programs by admitting students with 

intellectual disabilities who do not have 

a high school diploma or its equivalent, 

or admitting students with intellectual 

disabilities into non-degree or noncertificate programs. In addition, the 

proposed regulations would specify that 

a comprehensive transition and 

postsecondary program approved by the 

Secretary qualifies as an eligible 

program. 

Scope and Purpose (§ 668.230) 

Statute: Section 485(a) of the HEOA 

added section 484(s) to the HEA 

authorizing the Secretary to develop 

regulations allowing students with 

intellectual disabilities to be eligible for 

funds under the Federal Pell Grant, 

FSEOG, and FWS programs. New 

section 484(s)(3) of the HEA authorizes 

the Secretary to waive any statutory 

provision applicable to these programs, 

except needs analysis provisions, or 

waive any institutional eligibility 

provisions, to ensure that students with 

intellectual disabilities who enroll in 

comprehensive transition and 

postsecondary programs remain eligible 

for this assistance. 

Current Regulations: None. 

Proposed Regulations: The proposed 

regulations would specify that students 

with intellectual disabilities who enroll 

in comprehensive transition and 

postsecondary programs are eligible for 


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assistance under the Federal Pell Grant, 

FSEOG, and FWS programs, and would 

restate the Secretary’s waiver authority 

by providing that, except for provisions 

related to needs analysis, the Secretary 

may waive any title IV, HEA program 

requirement related to these programs or 

institutional eligibility. 

Reasons: The proposed regulations 

would implement the statutory 

provisions, and clarify that the 

Secretary’s waiver authority may be 

used to ensure that students with 

intellectual disabilities remain eligible 

for Federal Pell Grant, FSEOG, and FWS 

program funds. 

Definition of a Comprehensive 

Transition and Postsecondary Program 

(§ 668.231) 

Statute: Section 709 of the HEOA 

added section 760 to the HEA to define 

a comprehensive transition and 

postsecondary program as a degree, 

certificate, or non-degree program that— 

• Is offered by an institution of higher 

education; 

• Is designed to support students 

with intellectual disabilities who are 

seeking to continue academic, career 

and technical, and independent living 

instruction at an institution to prepare 

for gainful employment; 

• Includes an advising and 

curriculum structure; and 

• Requires students with intellectual 

disabilities to participate on not less 

than a half-time basis, as determined by 

the institution, with that participation 

focusing on academic components and 

occurring through one or more of the 

following activities: 

• Regular enrollment in creditbearing courses with students without 

disabilities. 

• Auditing or participating in courses 

with students without disabilities for 

which the student does not receive 

regular academic credit. 

• Enrollment in non-credit-bearing, 

nondegree courses with students 

without disabilities. 

• Participation in internships or 

work-based training in settings with 

students without disabilities. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.231 would define a 

comprehensive transition and 

postsecondary program by 

incorporating the statutory provisions, 

but would add a provision that the 

program would have to be delivered to 

students physically attending the 

institution. The proposed regulations 

would also clarify that the program 

must provide opportunities for students 

with intellectual disabilities to 

participate in coursework and other 

activities with students without 

disabilities. 

Reasons: Proposed § 668.231 would 

incorporate the statutory requirements 

from section 760 of the HEA except for 

the proposed addition and clarification 

described in the preceding Proposed 

Regulations section. Some of the nonFederal negotiators initially opposed the 

proposed requirement that a 

comprehensive transition and 

postsecondary program must be 

delivered to students physically 

attending the institution. The 

negotiators argued that students should 

have the option of taking distance 

courses because they might be unable to 

commute to a campus or because some 

courses might only be offered online. 

Other negotiators and experts in the 

field argued that Congress intended for 

students with intellectual disabilities to 

be integrated into campus life as much 

as possible and did not want to allow 

distance education to be the sole or 

main delivery method. The Department 

does not wish to regulate to preclude all 

distance courses for students with 

intellectual disabilities and may permit 

a limited number of courses to be 

delivered via distance, as long as the 

institution explains why it believes the 

course is applicable to, and benefits, 

students with intellectual disabilities. 

Similarly, we wish to clarify that a 

comprehensive transition and 

postsecondary program may include an 

internship for students or other 

activities that are located off-campus— 

the physically-attending requirement 

does not exclude these activities. 

With regard to students participating 

in one or more of the identified 

activities with students without 

disabilities, an institution has the 

flexibility to determine the activity or 

combination of activities that is best 

aligned with student needs and 

interests, as long as students with 

intellectual disabilities participate in 

these activities for at least half the time 

that they are enrolled in the program. 

Some non-Federal negotiators 

suggested that comprehensive transition 

and postsecondary programs might offer 

multiple ways for students with 

intellectual disabilities to participate in 

campus life beyond those that are 

delineated in the statute. In response, 

we propose that a program provide 

students with opportunities to 

participate in coursework and other 

activities with students without 

disabilities, such as student 

government, clubs, social events, and 

sports. 

Definition of a Student With an 

Intellectual Disability (§ 668.231) 

Statute: Section 709 of the HEOA 

added section 760 of the HEA to define 

student with an intellectual disability as 

a student: 

• With mental retardation or a 

cognitive impairment characterized by 

significant limitation in intellectual and 

cognitive functioning and adaptive 

behavior as expressed in conceptual, 

social, and practical adaptive skills; and 

• Who is currently, or was formerly, 

eligible for a free appropriate public 

education (FAPE) (i.e., special 

education and related services) under 

the Individuals with Disabilities 

Education Act (IDEA). 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.231 would define student with an 

intellectual disability as set forth in the 

statute, but clarify that a student who 

was determined eligible for services 

under the IDEA but was home-schooled 

or attended private school would also 

meet this part of this definition. 

Reasons: Proposed § 668.231 would 

incorporate the statutory requirements 

from section 760 of the HEA except for 

the proposed clarification regarding 

students who are home-schooled or 

attended private school. 

While some non-Federal negotiators 

felt that the statute could be read to 

include students with intellectual 

disabilities who are home-schooled or 

attended a private school but were not 

determined eligible for special 

education and related services under the 

IDEA, the Department does not believe 

that the HEA provides this flexibility. 

Under §§ 612(a)(3), 612(a)(10)(A)(ii)(I) 

and 613(a)(1) of the Individuals with 

Disabilities Education Act (IDEA) (20 

U.S.C. 1221e–3, 1406, 1411–1419; 23 

CFR part 304), State educational 

agencies (SEAs) and local educational 

agencies (LEAs) are required to locate, 

identify and evaluate all students with 

disabilities within the jurisdiction of the 

State and LEA. In addition, under 

§ 614(a)(1)(B) of the IDEA, LEAs and 

SEAs must assess students for eligibility 

for special education and related 

services under the IDEA if requested by 

the parent. These are ongoing 

responsibilities that extend to all 

children residing in the State, or in the 

jurisdiction of the LEA, including 

children attending private schools. To 

qualify for title IV aid pursuant to 

§ 484(s) of the HEA, a student should 

obtain an IDEA eligibility determination 

while the student is still age-eligible for 

IDEA services from, (1) for students 

attending private elementary and 

secondary schools, including home 


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schools if home schools are considered 

private schools under State law, the 

LEA in which the private school is 

located, or (2) for students not attending 

private elementary and secondary 

schools, the LEA that is responsible for 

making available a FAPE to the student 

(generally, the LEA in which the student 

resides). 

Program Eligibility (§ 668.232) 

Statute: Section 485(a)(8) of the 

HEOA adds section 484(s) to the HEA to 

establish the eligibility of students with 

intellectual disabilities who enroll in 

comprehensive transition and 

postsecondary programs to receive aid 

under the Federal Pell Grant, FSEOG, 

and FWS programs. 

Current Regulations: None. 

Proposed Regulations: Consistent 

with current procedures under which an 

institution adds an additional program, 

an institution that wishes to offer a 

comprehensive transition and 

postsecondary program would have to 

apply and receive approval from the 

Secretary under proposed § 668.232. 

The proposed regulations outline the 

elements that an institution must 

include in its application, including: 

• A detailed description of the 

comprehensive transition and 

postsecondary program, addressing all 

of the components of the program as 

defined in proposed § 668.231; 

• The policy for determining whether 

a student enrolled in the program is 

making satisfactory academic progress; 

• A statement of the number of weeks 

of instructional time and the number of 

semester or quarter credit hours or clock 

hours in the program, including the 

equivalent credit or clock hours 

associated with noncredit or reduced 

credit courses or activities; 

• A description of the educational 

credential offered or identified outcome 

or outcomes established by the 

institution for all students enrolled in 

the program; 

• A copy of the letter or notice sent 

to the institution’s accrediting agency 

informing the agency of its 

comprehensive transition and 

postsecondary program; and 

• Any other information the Secretary 

may require. 

Reasons: Proposed § 668.232 would 

incorporate the statutory provisions 

from section 484(s) of the HEA. The 

Department would use the requested 

information to determine whether to 

approve the institution’s program for 

funding under the Federal Pell Grant, 

FSEOG, and FWS programs. 

The requirement that an institution 

provide a copy of the notice sent to its 

accrediting agency is intended only to 

ensure that the accrediting agency is 

informed that the institution offers or 

will offer a comprehensive transition 

and postsecondary program. The 

accrediting agency would then decide 

whether to take any actions. 

One of the non-Federal negotiators 

felt that an institution should not have 

to set up a separate advising and 

curriculum structure for students with 

intellectual disabilities. The Department 

will consider, on a case-by-case basis, 

allowing an institution to use an 

existing structure based on the 

institution’s explanation of how that 

structure is applicable to, and benefits, 

students with intellectual disabilities. 

Other negotiators asked whether the 

Department would approve a 

comprehensive transition and 

postsecondary program developed to 

serve the needs of a single student, as 

this is already the practice in the field. 

The Department will consider, on a 

case-by-case basis, whether to approve a 

comprehensive transition and 

postsecondary program developed to 

serve the needs of a single student. 

However, an institution would have to 

submit a separate application for each 

comprehensive transition and 

postsecondary program for which it 

seeks approval, even if the program is 

developed for only one student, as each 

would be considered a separate 

program. 

Student Eligibility (§§ 668.32 and 

668.233) 

Statute: Section 484(s) of the HEA 

specifies that a student with an 

intellectual disability must: 

• Be enrolled or accepted for 

enrollment in a comprehensive 

transition and postsecondary program 

for students with intellectual disabilities 

at an institution of higher education; 

• Be maintaining satisfactory progress 

in the program as determined by the 

institution, in accordance with 

standards established by the institution; 

and 

• Meet the student eligibility 

requirements in sections 484(a)(3), (4), 

(5), and (6) of the HEA, under which a 

student must not be in default on any 

Federal student loans, must have filed a 

FAFSA, must be a United States citizen 

or national, and, if the student was 

convicted of fraud in obtaining funds 

under this title, must have repaid those 

funds. 

Current Regulations: Section 668.32 

describes the requirements for student 

eligibility for title IV, HEA program 

assistance. In part, under this section a 

student must: 

• Be enrolled for the purpose of 

obtaining a degree or certificate; 

• Have a high school diploma, a 

recognized equivalent of a high school 

diploma, or have passed an ability to 

benefit test; and 

• Be making satisfactory progress 

according to the institution’s published 

standards for satisfactory progress that 

satisfy the provisions of § 668.16(e) and, 

if applicable, those under § 668.34. 

Proposed Regulations: Proposed 

§§ 668.32(n) and 668.233 would provide 

that a student with intellectual 

disabilities enrolled in a comprehensive 

transition and postsecondary program 

may be eligible for title IV, HEA 

program assistance under the Federal 

Pell Grant, FSEOG, and FWS programs 

if— 

• The student is making satisfactory 

academic progress in accordance with 

the institution’s published standards for 

students enrolled in the comprehensive 

transition and postsecondary program; 

and 

• The institution obtains a record 

from a local or State educational agency 

that the student is or was eligible for 

special education and related services 

under IDEA. If the student’s record does 

not indicate that the student has an 

intellectual disability, as discussed in 

paragraph (1) of the definition of a 

student with an intellectual disability in 

proposed § 668.231, the institution 

would have to also obtain 

documentation from another source that 

identifies the intellectual disability. 

Reasons: The proposed regulations 

would implement the statutory 

requirements by clarifying that a student 

with an intellectual disability is exempt 

from the requirements that he or she 

have a high school diploma or its 

equivalent, and is making satisfactory 

academic progress under § 668.16(e) and 

§ 668.34, if applicable. Also, because a 

student with an intellectual disability 

does not have to be enrolled in a degree 

or certificate program, the student 

would be eligible for a second Pell Grant 

in the same award year if the student 

otherwise qualifies for that grant under 

proposed § 690.67. 

With respect to documentation 

establishing an intellectual disability, 

there was some concern among the 

negotiators that institutions would 

require updated evaluations that could 

be costly or cost prohibitive. Proposed 

§ 668.233 would allow institutions to 

accept the most recent documentation, 

even if it is more than a few years old. 

Also, if available in the student’s record 

and to better understand a student’s 

abilities and limitations, we encourage 

institutions to consider using a student’s 

summary of academic achievements and 

functional performance, as described in 

34 CFR 300.305(e)(3), which includes 


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recommendations on how to assist the 

student in meeting the student’s 

postsecondary goals. 

Institutional Information (§ 668.43) 

Statute: Section 485(a)(I) of the HEA 

specifies that institutions must 

disseminate information about special 

facilities and services available to 

students with disabilities. 

Current Regulations: Section 668.43 

requires an institution to provide a 

description of any special facilities and 

services available to disabled students. 

Proposed Regulations: Proposed 

§ 668.43(a)(7) would change the phrase 

‘‘any special facilities and services’’ to 

‘‘the services and facilities,’’ and replace 

the phrase ‘‘disabled students’’ with 

‘‘students with disabilities.’’ The 

proposed changes would also clarify 

that a description of services and 

facilities for students with disabilities 

must also contain the services and 

facilities available for students with 

intellectual disabilities. 

Reasons: The proposed changes 

reflect changes in terminology in the 

special education and disability fields. 

Further, we wanted to clarify that a 

description of the services and facilities 

available to students with intellectual 

disabilities must be included in the 

description of the services and facilities 

available to all students with 

disabilities. 

Part 675 Federal Work-Study 

Programs 

Definition of Community Services 

(§ 675.2) 

Adding the Field of Emergency 

Preparedness and Response 

Statute: Section 441 of the HEOA 

amended the definition of community 

services in section 441(c)(1) of the HEA 

to include the field of emergency 

preparedness and response. 

Current Regulations: Section 675.2(b) 

provides the definitions of terms for the 

FWS Program, including the term 

community services. The definition of 

community services includes a list of 

possible services in fields such as 

literacy training and education tutoring 

that may be considered community 

services under the FWS Program. The 

definition does not provide a complete 

list of acceptable services, but highlights 

certain services that may improve the 

quality of life for outside community 

residents, particularly low-income 

individuals, or solve particular 

problems related to their needs. 

Proposed Regulations: We propose to 

revise the definition of the term 

community services in § 675.2(b) to 

include the field of emergency 

preparedness and response to reflect the 

statutory definition. 

Reasons: This proposed regulatory 

change is needed to conform the 

regulatory definition of community 

services with section 441(c)(1) of the 

HEA. 

Conforming FWS Payment 

Requirements to the Cash Management 

Regulations (§ 675.16) 

Handling Minor Prior-Year Charges 

Statute: Under Part E—Need Analysis 

of the HEA (particularly sections 471 

through 473), a student’s need for most 

Title IV, HEA program funds for a 

period of enrollment during an award 

year is determined by subtracting the 

expected family contribution (EFC) and 

other estimated financial assistance for 

that same enrollment period during the 

award year from the student’s cost of 

attendance for the same period. The cost 

of attendance is based on current award 

year educational expenses. The EFC is 

the amount that can reasonably be 

contributed toward meeting the 

student’s educational expenses for the 

period of enrollment during the award 

year for which a need determination is 

made. The Title IV, HEA funds are 

awarded to defray the educational costs 

for the award year. 

Current Regulations: Under 

§ 675.16(a)(3)(iv), an institution may use 

a student’s current year FWS 

compensation to pay for minor prioraward year charges if the charges are 

less than $100, or the charges are $100 

or more and the payment of those 

charges does not prevent the student 

from paying his or her current 

educational costs. In either case, the 

institution must first obtain the 

student’s written authorization. The 

cash management requirements in 

§ 668.164(d) for the other title IV, HEA 

programs allow an institution to use a 

student’s current year title IV, HEA 

program funds to pay for minor prioryear charges if the charges are not more 

than $200. 

Proposed Regulations: Under the 

provisions in proposed § 675.16(b)(1)(ii) 

and (b)(2), the FWS regulations are 

amended in three ways regarding the 

use of current award year FWS funds to 

pay prior award year charges. First, the 

amount of prior award year charges that 

could be paid with current award year 

FWS funds would increase to not more 

than $200. Second, the FWS provision 

that allows an institution to pay for 

prior award year charges of $100 or 

more would be removed. Finally, we 

clarify that the $200 limit applies to all 

title IV, HEA program funds that an 

institution uses to pay prior-year 

charges. For example, if an institution 

uses FWS funds in combination with 

other title IV, HEA program funds to 

credit a student’s account to satisfy 

prior award year charges, the total 

amount of the funds used must be $200 

or less. We note that an institution is 

still required to obtain the student’s 

written authorization to credit FWS to 

the student’s account. 

Reasons: The proposed changes are 

needed to conform the FWS payment 

regulations to the cash management 

requirements in § 668.164(d) regarding 

the prior award year limit. When the 

Department amended the regulations for 

minor prior award year charges under 

§ 668.164(d) in November 1, 2007, for 

the other title IV, HEA programs, we 

failed to make the conforming change 

for the FWS Program in § 675.16. 

Electronic Disbursements 

Statute: The HEA does not address 

the issue of electronic disbursement of 

FWS or other Title IV, HEA program 

funds. 

Current Regulations: The current FWS 

regulations in § 675.16(a) provide that 

an institution may pay a student by 

check or similar instrument that the 

student can cash on his or her own 

endorsement, by initiating an electronic 

funds transfer (EFT) to the student’s 

bank account, or by crediting the 

student’s account at the institution. If an 

institution wishes to make an EFT or 

credit the student’s account at the 

institution, it must obtain the student’s 

written authorization. The current FWS 

regulations do not allow an institution 

to require a student to have a bank 

account in order to be paid FWS 

compensation. Also, the current FWS 

regulations do not address payments 

made via a stored-value card. 

Proposed Regulations: The proposed 

FWS regulations in § 675.16(a)(1) would 

adopt the regulations in § 668.164(c) for 

the direct payment of FWS 

compensation. The provisions for 

issuing a check and expanding the use 

of EFTs to bank accounts that underlie 

stored-value cards and other transaction 

devices that already exist for the other 

title IV, HEA programs would also apply 

to the FWS Program. The proposed 

regulations would remove the FWS 

requirement that an institution obtain a 

student’s written authorization to make 

an EFT payment and add a provision 

allowing an institution to issue a storedvalue card or similar device. The 

proposed regulations continue the 

current requirement that an institution 

must obtain a student’s written 

authorization to credit FWS 

compensation to a student’s account at 

the institution for any purpose because 


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the funds are earnings and holding 

those funds without the student’s 

permission would be a garnishment of 

wages. Finally, the proposed FWS 

regulations would allow an institution 

to establish a policy requiring students 

to provide bank account information or 

open an account at a bank of the 

student’s choosing, as long as this 

policy does not delay the disbursement 

of FWS earnings to the student. Thus, if 

the student does not comply with the 

policy, the institution must still 

disburse the funds to the student in a 

timely manner in another way. Further, 

an institution is not allowed to refuse to 

hire a student who does not comply 

with the policy to provide bank account 

information or open a bank account, nor 

to fire him or her for that same reason. 

This policy is based on section 445(c) of 

the HEA, which states that an 

institution may, upon the request of a 

student, make a direct deposit to the 

student’s account. 

Reasons: The proposed regulations 

eliminate inconsistencies and otherwise 

harmonize the requirements in the FWS 

and cash management regulations. 

Providing consistency among the title 

IV, HEA programs for making direct 

payments to students would make the 

FWS Program easier for institutions to 

administer and make the process easier 

for students to understand. 

Eliminating Separate Student 

Authorizations 

Statute: The HEA does not address 

the issue of student written 

authorizations for crediting FWS funds 

directly to the student’s account at the 

institution or holding FWS credit 

balances on behalf of a student. 

Current Regulations: Under 

§ 675.16(a), an institution must obtain 

written authorization from the student 

to credit the student’s account at the 

institution with FWS funds and to hold 

a title IV credit balance. The 

authorization to credit FWS funds to a 

student’s account at the institution must 

be separate from any other 

authorization. The FWS written 

authorization may not be included as 

part of a list or in combination with 

other types of authorizations signed by 

the student, including authorizations for 

all the other title IV, HEA programs as 

provided in § 668.165. This requirement 

for a separate student authorization to 

credit FWS funds to a student’s account 

also applies to the written authorization 

required to hold an FWS credit balance 

for the student. 

Proposed Regulations: Under the 

provisions in proposed § 675.16(d), the 

FWS written authorization required to 

credit a student’s account at the 

institution or the written authorization 

required to hold a credit balance for the 

student will no longer be required to be 

separated from other authorizations. 

Reasons: The proposed FWS change 

would allow the administrative 

collection of the student authorizations 

required under the FWS Program for 

crediting student accounts and holding 

credit balances at the institution to be 

combined with the student 

authorizations required in § 668.165 for 

the other title IV, HEA programs. This 

combination of student authorizations 

will make the collection process easier 

for both the student and the institution. 

Terms for the Work Colleges Program 

(Subpart C of Part 675) 

Statute: The amendments made by the 

HEOA to section 448 of the HEA replace 

the term work-learning each place it 

appears in the statute for the Work 

Colleges Program with the term worklearning-service. In addition, the name 

of the comprehensive student worklearning program that a work college 

must have, was changed to the 

comprehensive student work-learningservice program. 

Current Regulations: Throughout 

subpart C of part 674, the current Work 

Colleges Program regulations refer to the 

term work-learning or the term 

comprehensive work-learning programs 

and the term comprehensive student 

work-learning program is defined in 

§ 675.41(b). 

Proposed Regulations: Under the 

proposed changes to the regulations in 

subpart C of part 674, the term worklearning is replaced with the term worklearning-service each place that it 

appears. Further, the name of the 

defined term comprehensive student 

work-learning program in § 675.41(b) 

would be changed to comprehensive 

student work-learning-service program. 

Reasons: This change is needed to 

conform the wording in the Work 

Colleges Program regulations to the 

wording used in the HEA. The addition 

of the word service is important because 

it recognizes the value of service as an 

intrinsic element and educational 

outcome of work that is provided as part 

of the overall education program at a 

Work College that benefits the college, 

the community, and the student. The 

word service that was added as part of 

the term work-learning-service in the 

HEA and now in the proposed 

regulations, refers to uncompensated 

volunteer service or compensated 

service for work performed for the good 

of the college community or the external 

community beyond the campus. It 

includes work performed in the public 

interest at a Federal, State, or local 

public agency, or at a private nonprofit 

organization. 

Additional Standards for the Definition 

of the Term Work College 

Statute: The amendments made by the 

HEOA to section 448 of the HEA 

amended the definition of work college. 

The term work college was amended by 

adding additional standards that a 

public or private nonprofit institution 

must meet to be eligible for this 

program. The institution must be a fouryear, degree-granting institution and 

must require at least one-half of all of its 

full-time students to participate in a 

comprehensive student work-learningservice program. The institution must 

continue to have all of its resident 

students participate in a comprehensive 

student work-learning-service program. 

In addition, the institution must require 

the students to participate in a 

comprehensive student work-learningservice program for at least five hours 

each week or at least 80 hours during 

each period of enrollment, except for 

summer school, an approved study 

abroad program, or an externship 

program. A period of enrollment means 

a semester, quarter, trimester, or a 

similar period. 

Current Regulations: Section 

675.41(a) defines the term work college. 

Proposed Regulations: Under 

proposed § 675.41(a), the definition of 

work college would now include the 

requirement that an institution must be 

a four-year, degree-granting institution. 

The proposed definition would also 

provide that the institution must have at 

least one-half of all of its full-time 

students participate in the required 

comprehensive work-learning-service 

program. In addition, all of the students 

in that program must participate for a 

minimum of five hours each week or a 

minimum of 80 hours during each 

period of enrollment, except for summer 

school, an approved study abroad 

program, or an externship program. 

Reasons: The proposed additional 

requirements are needed to conform the 

definition of a work college to the 

statutory definition. 

Expanding FWS Community Service 

Jobs (§§ 675.18(g) and 675.26(d)) 

Promoting Civic Education and 

Participation Activities 

Statute: The amendments made by the 

HEOA to section 443 of the HEA permit 

institutions to meet the FWS seven 

percent community service expenditure 

requirement by using FWS funds to pay 

students employed in projects that teach 

civics in schools, raise awareness of 

government functions or resources, or 

increase civic participation. 


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If an institution decides to place FWS 

students in a community service project 

performing civic education and 

participation activities, it must to the 

extent practicable: 

• Give priority to the employment of 

FWS students in projects that educate or 

train the public about evacuation, 

emergency response, and injury 

prevention strategies relating to natural 

disasters, acts of terrorism, and other 

emergency situations; and 

• Ensure that the FWS students 

performing these projects receive the 

appropriate training to carry out the 

required educational services. 

The FWS students employed in 

community service projects performing 

these civic education and participation 

activities may be paid for the time spent 

in training and travel. Further, the FWS 

students employed in community 

service projects performing civic 

education and participation activities 

may be paid FWS compensation with a 

Federal share that exceeds the regular 

75 percent limit. 

Current Regulations: The current FWS 

regulations do not address and promote 

civic education and participation 

activities as a community service 

project. 

Proposed Regulations: Section 

675.18(g) would be amended to 

implement section 443 of the HEA that 

promotes the use of FWS funds to 

employ FWS students in community 

service projects performing civic 

education and participation activities. 

The proposed regulations would 

provide that when a school decides to 

have FWS students perform these 

activities, to the extent practicable, it 

must give priority to the employment of 

students participating in projects that 

educate or train the public about 

evacuation, emergency response, and 

injury prevention strategies relating to 

natural disasters, acts of terrorism, and 

other emergency situations. The 

institution, to the extent practicable, 

would also have to ensure that the 

students receive the appropriate training 

to carry out the educational services 

required. 

Section 675.26(d) would be amended 

to implement the requirement in section 

443 of the HEA to allow the Federal 

share of the compensation paid to FWS 

students performing the civic education 

and participation activities in 

community service projects to exceed 

the regular 75 percent limit. These FWS 

students may be paid with a Federal 

share of up to 100 percent. 

Reasons: The proposed changes to the 

FWS regulations are needed to add this 

new use of FWS funds and to promote 

the employment of FWS students in 

community service projects performing 

civic education and participation 

activities. Allowing institutions to pay 

FWS students with a Federal share of up 

to 100 percent encourages institutions to 

place students in community service 

projects performing civic education and 

participation activities. 

We note that the conference language 

in the HEOA urges FWS participating 

institutions to improve the availability 

and quality of community service job 

information to students and to improve 

their outreach to community service 

agencies. The addition of this new use 

of FWS funds to have students perform 

civic education and participation 

activities in community service projects 

provides an opportunity for an 

institution to make the above requested 

improvements and to meet the seven 

percent community service expenditure 

requirement. 

Flexible Use of FWS Funds (§ 675.18(i)) 

Paying Students Under Certain 

Conditions in the Event of a Major 

Disaster 

Statute: The amendments made by the 

HEOA added a new subsection (d) to 

section 445 of the HEA. This new 

provision allows an eligible institution 

located in any area affected by a major 

disaster to make FWS payments to 

disaster-affected students under certain 

limited conditions. The FWS payments 

may only be made for the period of 

time, not to exceed one academic year, 

in which the disaster-affected students 

were prevented from fulfilling their 

FWS work obligations due to the major 

disaster. 

Payments may be made to the 

disaster-affected students in an amount 

equal to or less than the amount of FWS 

wages the students would have been 

paid had the students been able to 

complete the work obligation necessary 

to receive the FWS funds. Payments 

may not be made to any student who 

was not eligible for FWS or was not 

completing the work obligation 

necessary to receive the FWS funds 

prior to the occurrence of the major 

disaster. Any payments made to 

disaster-affected students must meet the 

applicable FWS matching requirements, 

unless the Secretary has waived the 

matching requirements. 

Section 445(d) of the HEA defines the 

term ‘‘disaster-affected student’’ as a 

student enrolled at the institution who 

has received the FWS award and earned 

FWS wages prior to the occurrence of 

the major disaster, was prevented from 

working for all or part of the academic 

year due to the major disaster, and was 

unable to be reassigned to another FWS 

job after the major disaster. The 

amended HEA also provides that the 

term ‘‘major disaster’’ has the meaning 

as defined in section 102(2) of the 

Robert T. Stafford Disaster Relief and 

Emergency Assistance Act (42 U.S.C. 

5122(2)). 

Current Regulations: The current FWS 

regulations do not provide for the 

flexibility to pay FWS funds to disasteraffected students unable to work due to 

a major disaster. Under the current 

regulations, there is no exception to the 

FWS Program requirement that an FWS 

student may never be paid FWS funds 

until the student has performed the 

work and earned those funds. 

Proposed Regulations: Section 675.18 

would be amended by adding a new 

paragraph (i) that allows an institution 

located in any area affected by a major 

disaster to make FWS payments to 

disaster-affected students. However, this 

one special exception to the basic 

requirement that an FWS student may 

not be paid FWS funds until the student 

has performed the FWS work has very 

specific conditions that must be met. 

To apply this limited flexible use of 

FWS funds to pay disaster-affected 

students an institution must be located 

in an area affected by a major disaster. 

A major disaster must be declared by 

the President. The counties or parishes 

covered by the declaration are provided 

by the Federal Emergency Management 

Agency (FEMA). 

The FWS payments may only be made 

for the period of time in which the 

disaster-affected students were 

prevented from completing their FWS 

work obligations due to the major 

disaster. The period of time cannot 

exceed one academic year for this 

purpose. The FWS payments made to 

disaster-affected students cannot exceed 

the amount of FWS wages the students 

would have been paid had these 

students been able to complete the FWS 

work obligation necessary to receive the 

FWS funds. The institution in paying 

the FWS funds to the disaster-affected 

students must make the appropriate 

match for the FWS Federal funds, 

unless the Secretary has waived the 

matching requirements. 

The disaster-affected students must 

have been eligible for FWS and awarded 

FWS prior to the occurrence of the 

major disaster. The disaster-affected 

students must have earned FWS funds 

and be completing the FWS work 

obligation prior to the occurrence of the 

major disaster. The disaster-affected 

students could not have been separated 

from their FWS employment prior to the 

occurrence of the major disaster. The 

major disaster must prevent the FWS 

students from working for a portion or 


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all of the academic year. In addition, the 

disaster-affected students must be 

unable to be reassigned to other FWS 

jobs by the institution after the 

occurrence of the major disaster. 

Reasons: The proposed changes to the 

FWS regulations are needed to add this 

new flexibility to pay disaster-affected 

students who are unable to work 

because of a major disaster. The change 

would allow the eligible FWS students 

unable to work due to a major disaster 

to still receive the FWS funds that they 

need to help pay for educational costs. 

Part 686 Teacher Education 

Assistance for College and Higher 

Education (TEACH) Grant Program 

TEACH Grant Program 

Periods of Suspension (§ 686.41) 

Statute: None. 

Current Regulations: Section 

686.41(a) provides that a TEACH Grant 

recipient may be granted a suspension 

of the eight-year period required for 

completing his or her teaching service 

obligation, in a low-income school as a 

highly-qualified teacher in a high-need 

field, based on a call or order to active 

military duty. The suspension ends 

upon the completion of that military 

service. 

Proposed Regulations: A TEACH 

Grant recipient who is called or ordered 

to active military duty (or his or her 

representative) may request a 

suspension of the eight-year period in 

increments not to exceed three years. 

Under proposed § 686.41(a)(2), a request 

for a suspension of the eight-year period 

may be granted in one-year increments. 

Proposed § 686.41(a)(2)(ii) would allow 

a suspension of the eight-year period for 

no more than three years. Once the 

recipient has exceeded the three-year 

suspension period, the recipient (or his 

or her representative) may request a 

discharge of all or a portion of his or her 

teaching service obligation. 

Reasons: The proposed regulations 

would no longer provide an indefinite 

delay of the eight-year, service 

obligation period to a TEACH Grant 

recipient who is called or ordered to 

active duty. Instead a TEACH Grant 

recipient that exceeds the three-year 

suspension period could qualify for a 

discharge of all or part of his or her 

teaching service obligation as provided 

in proposed § 686.42. The proposed 

discharge provides a greater benefit than 

a suspension of the service obligation to 

a TEACH Grant recipient who is called 

or ordered to active military duty for 

extended periods. 

Discharge of Agreement To Serve 

(§ 686.42) 

Statute: Section 420N(d)(2) of the 

HEA, as amended by the HEOA, 

requires the Secretary to establish 

categories of extenuating circumstances 

under which a TEACH Grant recipient 

who is unable to fulfill all or a portion 

of his or her teaching service obligation 

may be excused from fulfilling that 

portion of the teaching service 

obligation. 

Current Regulations: None. 

Proposed Regulations: As provided in 

proposed § 686.42(c)(2), the recipient 

may qualify for a proportional discharge 

of his or her service obligation based on 

the number of years the recipient has 

been called or ordered to active military 

duty. The recipient would qualify for a 

one-year discharge if the call or order to 

active military duty is for more than 

three years. Similarly, the recipient 

would qualify for a two-year, three-year, 

or total discharge if the call or order to 

active military duty is for more than 

four, five, or six years, respectively. 

To obtain the discharge, the recipient 

(or his or her representative) would be 

required under § 686.42(c)(3) to provide 

the Secretary: 

• A written statement from his or her 

commanding or personnel officer 

certifying that the recipient is on active 

duty in the Armed Forces, the date on 

which that service began, and the date 

the service is expected to end; and 

• A copy of his or her official military 

orders and military identification. 

The term Armed Forces would be 

defined in § 686.42(c)(4) to mean the 

Army, Navy, Air Force, Marine Corps, 

and Coast Guard. 

Finally, under proposed 

§ 686.42(c)(5), the Department would 

notify a TEACH Grant recipient or his 

or her representative of the decision 

reached on his or her request for a 

partial or full discharge of the teaching 

service obligation. The grant recipient 

would be responsible for fulfilling any 

teaching service obligation that is not 

discharged. 

Reasons: The proposed regulations in 

§ 686.41 implement the statutory 

requirement in section 420N(d)(2)of the 

HEA by providing for a discharge of a 

teaching service obligation based on a 

call or order to active military duty. 

Under current § 686.42(a) and (b), a 

TEACH Grant recipient may have his or 

her teaching service obligation 

discharged upon the recipient’s death or 

if he or she becomes totally and 

permanently disabled. The Department 

believes it would be appropriate to also 

provide a discharge of a TEACH Grant 

recipient’s teaching service obligation in 

cases when the grant recipient cannot 

comply with his or her agreement to 

teach because of a call or order to active 

military duty for an extended period of 

time. TEACH Grant recipients who are 

called to active military duty for an 

extended period of time may return 

from their military service with teaching 

credentials that are no longer valid, may 

require retraining to meet the standards 

established by the State before they can 

be placed in a teaching position, or may 

otherwise encounter difficulties in 

obtaining a teaching position that could 

be used to fulfill their teaching service 

obligation. 

Several non-Federal negotiators 

believed that additional extenuating 

circumstances should also be 

considered. Some of them suggested 

that we expand the categories of 

extenuating circumstances to include 

economic hardship. Noting that teachers 

were being laid off in a number of areas, 

they argued that TEACH Grant 

recipients might not be able to find fulltime employment in their high-need 

fields due to the current economic 

conditions, which they felt might 

continue for some time. While we are 

sympathetic to these concerns, the 

Department believes that, because a 

TEACH Grant recipient has eight years 

to complete a four-year teaching service 

obligation, he or she should still be able 

to fulfill that obligation notwithstanding 

the fact that he or she may encounter a 

temporary hardship in locating a 

suitable position. 

Part 690 Federal Pell Grant Program 

Two Federal Pell Grants in an Award 

Year (§§ 690.63(h), 690.64, and 690.67) 

Statute: Section 401(b)(5) of the HEA, 

as amended by the HEOA, provides that 

a student may receive up to two 

consecutive Federal Pell Grant 

Scheduled Awards during a single 

award year if the student is enrolled at 

least half-time for more than one 

academic year, more than two 

semesters, or the equivalent time during 

a single award year. The student must 

also be enrolled in a certificate, 

associate degree, or baccalaureate degree 

program. Section 484(s)(3) of the HEA 

provides the authority to waive this 

provision for students with intellectual 

disabilities who enroll in a 

comprehensive transition and 

postsecondary program. 

Student Eligibility for a Second 

Scheduled Award (§ 690.67(a)) 

Current Regulations: The current 

regulations provide that the Secretary 

announces in the Federal Register 

whether an institution may award up to 


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a second Federal Pell Grant Scheduled 

Award to a student in a particular award 

year. An institution may award up to a 

second Scheduled Award if a student is 

enrolled as a full-time student in an 

eligible program that leads to an 

associate or baccalaureate degree and 

the student has completed the credit 

hours and weeks of instructional time in 

an academic year leading to his or her 

associate or baccalaureate degree 

program. If an institution awards a 

student a second Scheduled Federal Pell 

Grant award, the institution must make 

that award to all students who qualify. 

Proposed Regulations: The proposed 

regulations would amend § 690.67 to 

provide that a student would be eligible 

for a second Scheduled Award if the 

student has earned in an award year at 

least the credit or clock hours of the first 

academic year of the student’s eligible 

program, and is enrolled as at least a 

half-time student in a program leading 

to a bachelor’s or associate degree or 

other recognized educational credential 

(such as a postsecondary certificate or 

diploma), except as provided in 

proposed 34 CFR part 668, subpart O for 

students with intellectual disabilities. 

Reasons: We are proposing these 

requirements to encourage a student to 

accelerate the completion of his or her 

program of study within a shorter time 

period than the regularly scheduled 

completion time, i.e., the published 

length of the program. Providing up to 

two Federal Pell Grants to students for 

attendance in all payment periods in an 

award year supports this acceleration. 

We believe that, by encouraging the 

student to complete the credit or clock 

hours in the academic year 

expeditiously, the benefit of most 

students’ second Scheduled Awards 

would be maximized. 

We initially proposed that a student 

would be required to complete the 

credit or clock hours of the first 

academic year before receiving a second 

Scheduled Award or to complete the 

credit or clock hours of the first 

academic year in the payment period for 

which he or she is receiving a payment 

from the second Scheduled Award in 

the award year. We further proposed to 

amend § 690.80 to provide that if the 

projected enrollment status of a student 

enrolled in a term-based program 

changed at any time during a payment 

period in which the student is receiving 

a payment from a second Scheduled 

Award in an award year, the institution 

would be required to recalculate the 

student’s payment for the payment 

period. This recalculation requirement 

would ensure that a student who is not 

accelerating does not receive the benefit 

of a payment from a second Scheduled 

Award. 

We did not propose any similar 

recalculation requirement for clock-hour 

and nonterm-credit-hour programs. A 

recalculation requirement would not be 

relevant to these programs. A student 

enrolled in one of these programs must 

successfully complete the credit or 

clock hours of a payment period to 

progress to the next payment period. 

Thus, a student is required to earn the 

credit or clock hours of the first 

academic year to advance to a payment 

from a second Scheduled Award. 

Some of the non-Federal negotiators 

objected to the recalculation 

requirements for term-based programs. 

These non-Federal negotiators were 

concerned that the requirements would 

be administratively burdensome. They 

also objected to the difference in 

treatment compared to the requirements 

for recalculations for payments from a 

student’s first Scheduled Award in the 

award year. In addition, some of these 

non-Federal negotiators believed that 

the satisfactory academic progress 

standards in 34 CFR 668.16(e), as well 

as the new limitation under section 

401(c)(5) of the amended HEA that a 

student’s lifetime eligibility is limited to 

nine Scheduled Awards, provided 

sufficient minimum standards for 

ensuring a student’s advancement in his 

or her eligible program. We are not 

convinced that the satisfactory progress 

standards at most institutions are robust 

enough for this purpose or that the 

lifetime limitation on eligibility is short 

enough to provide a sufficient basis for 

encouraging students to complete their 

eligible programs in less than the 

regularly scheduled completion time. 

As a result of the non-Federal 

negotiators objections to the 

requirements for recalculations for 

changes in enrollment status, we 

proposed an alternative approach. 

Instead of recalculation, we proposed 

that a student in a term-based program 

must earn the credit or clock hours in 

an academic year before the student 

would be eligible for any payment from 

a second Scheduled Award. This 

proposal would be similar to the current 

treatment of students in clock-hour and 

nonterm-credit-hour programs. 

Some of the non-Federal negotiators 

objected to the proposed alternative 

approach. They did not believe it was 

appropriate to require a student in a 

term-based program to earn the credit or 

clock hours of the first academic year 

for the student to be eligible for a 

second Scheduled Award. In addition, 

the non-Federal negotiators disagreed 

with our understanding that 

acceleration means that a student would 

complete his or her eligible program in 

less than the regularly scheduled period 

for completion. The non-Federal 

negotiators believed that acceleration 

meant that a student was earning 

additional credit or clock hours beyond 

the first academic year in the award year 

without respect to whether the 

additional hours were sufficient for the 

student to advance significantly toward 

the completion of his or her eligible 

program. Some of these non-Federal 

negotiators believed that the statute 

intended acceleration to apply only on 

a student-by-student basis. For example, 

a student would be accelerating by 

completing his or her eligible program 

in a shorter period of time than the 

student would otherwise have 

completed the program without 

reference to any objective standard. We 

do not agree. We do not believe the 

statute limits the implementation of 

these requirements in this manner, nor 

do we believe that adopting the nonFederal negotiators’ position would 

provide the necessary encouragement 

for a student to accelerate the 

completion of his or her educational 

program. 

As an alternative to our proposal, the 

non-Federal negotiators again advanced 

their belief that the satisfactory progress 

standards and the nine-ScheduledAward limit were sufficient. However, 

they did not provide any further 

information on how these requirements 

would serve to advance a student’s 

acceleration in his or her eligible 

program. 

Consensus was not reached and the 

Department decided to move forward 

with the proposal to require a student to 

earn the credit or clock hours in the 

(first) academic year before the student 

would be eligible for any payment from 

a second Scheduled Award in the award 

year. 

Transfer Students (§ 690.67(b)) 

Current Regulations: None. 

Proposed Regulations: The proposed 

regulations would provide that an 

institution must determine the credit or 

clock hours that a transfer student has 

earned at a prior institution during the 

award year based on the Federal Pell 

Grant disbursements that the student 

received at the prior institution during 

the award year in relation to the 

student’s Scheduled Award at that prior 

institution. The credit or clock hours 

that the student would be considered to 

have earned would be in the same 

proportion to credit or clock hours in 

the current institution’s academic year 

as the disbursements that the student 

has received at the prior institution in 

the award year are in proportion to the 


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student’s Scheduled Award at the prior 

institution. 

If the student’s first Scheduled Award 

has been disbursed at institutions 

previously attended, the student would 

be considered to have completed the 

credit or clock hours of the first 

academic year in the award year. If less 

than the first Scheduled Award has 

been disbursed at prior institutions, the 

student’s credit or clock hours earned 

would be determined by multiplying the 

payments of the student’s Scheduled 

Award disbursed at a prior institution 

during the award year by the number of 

credit or clock hours in the current 

institution’s academic year and dividing 

the product of the multiplication by the 

amount of the Scheduled Award at the 

prior institution. If the student 

previously attended more than one 

institution in the award year, the 

institution would add the results of the 

calculation for each prior institution. 

For example, a transfer student received 

$2,000 of his or her first Scheduled 

Award of $4,000 while enrolled at a 

prior institution. The student’s current 

institution defines its academic year, in 

part, as 24 semester hours. To determine 

the number of credit hours the student 

is considered to have earned in the 

award year at the prior institution, the 

current institution performs the 

following calculation: 

$2,000 disbursement 24 semester hours

$4,000 Scheduled Aw

×

ard = 12 semester hours

In this case the student would be 

considered to have earned 12 semester 

hours of the first academic year in the 

award year. 

Reasons: We are proposing these 

changes because we believe that they 

limit the administrative burden for 

institutions in implementing the 

requirements for determining the 

eligibility of transfer students. 

During negotiated rulemaking, the 

non-Federal negotiators noted that our 

initial proposal did not address the 

eligibility status of transfer students. As 

a result, we proposed that, unless the 

institution had information to the 

contrary such as a transcript from the 

other institution, an institution could 

determine the credit or clock hours that 

a transfer student earned at another 

institution during the award year based 

on the Federal Pell Grant disbursements 

that the student received at the other 

institution during the award year in 

relation to the student’s Scheduled 

Award at that institution. Many of the 

non-Federal negotiators were concerned 

about the difficulties for institutions 

administering the Federal Pell Grant 

Program. Specifically, the non-Federal 

negotiators were concerned that 

transcripts that might be in the 

registrar’s office might not always be 

readily available to the financial aid 

office in a form or process conducive to 

implementing these provisions. 

Based on the non-Federal negotiators’ 

concerns, we have revised our proposal 

to provide that an institution would rely 

solely on assuming the credit or clock 

hours earned in an award year based on 

the Federal Pell Grant disbursements 

received from the student’s Scheduled 

Award at another institution. 

Special Circumstances (§ 690.67(c)) 

Current Regulations: None. 

Proposed Regulations: The proposed 

regulations would provide that a 

financial aid administrator may waive 

the requirement that a student complete 

the credit or clock hours in the student’s 

first academic year in the award year if 

the administrator determines that the 

student was unable to complete the 

clock or credit hours in the student’s 

first academic year in the award year 

due to circumstances beyond the 

student’s control. The financial aid 

administrator would be required to 

make and document the determination 

on an individual basis. The proposed 

regulations also provide examples of 

circumstances that may be considered 

beyond the student’s control, such as 

withdrawing from classes due to illness, 

and those that would not be considered 

beyond the student’s control, such as 

failing to register for a necessary class to 

avoid a particular instructor. 

Reasons: During negotiated 

rulemaking, the non-Federal negotiators 

noted that our initial proposal did not 

provide any authority for a financial aid 

administrator to consider whether there 

were special circumstances affecting a 

student’s ability to complete the credits 

or clock hours to be eligible for a 

payment from a second Scheduled 

Award. We agree. 

Nonapplicable Credit or Clock Hours 

(§ 690.67(d)) 

Current Regulations: None. 

Proposed Regulations: We are 

proposing that, in determining a 

student’s eligibility for a second 

Scheduled Award in an award year, an 

institution may not use credit or clock 

hours that the student received based on 

Advanced Placement (AP) programs, 

International Baccalaureate (IB) 

programs, testing out, life experience, or 

similar competency measures. 

Reasons: A student’s eligibility for a 

second Scheduled Award is based, in 

part, on the student’s progress in 

earning the credits or clock hours of the 

first academic year in the award year. 

This provision ensures that only those 

credits or clock hours earned in the 

award year are considered in 

determining the student’s eligibility. 

Payment Period in Two Award Years 

(§ 690.64) 

Current Regulations: Under current 

§ 690.64, if a payment period is 

scheduled to occur in two award years, 

an institution must consider this 

‘‘crossover’’ payment period to occur 

entirely in one award year. In general, 

an institution may assign a crossover 

payment to either award year. The 

assignment, for example, may be on a 

student-by-student basis, or the 

institution may establish a policy of 

assigning the crossover payment period 

of all students to the same award year. 

If more than six months of a crossover 

payment period are scheduled to occur 

within one award year, the institution 

must assign the payment period to that 

award year. 

Proposed Regulations: Under 

proposed § 690.64, if a student is 

enrolled in a crossover payment period 

as a half-time or less-than-half-time 

student, the current requirements 

generally would apply. 

If a student is enrolled as a threequarter-time or full-time student, an 

institution must consider the payment 

period to be in the award year in which 

the student would receive the greater 

payment for the payment period based 

on the information available at the time 

that the student’s Federal Pell Grant is 

initially calculated. If the institution 

subsequently receives information that 

the student would receive a greater 

payment for the payment period by 

reassigning the payment to the other 

award year, the institution would be 

required to reassign the payment to the 

award year providing the greater 

payment. 

A student may request that the 

institution place the payment period in 

the award year that can be expected to 


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result in the student receiving a greater 

amount of Federal Pell Grants over the 

two award years in which the payment 

period is scheduled to occur. If the 

student makes that request, the 

institution must assign the payment 

period to that award year. 

Reasons: To the extent practicable, we 

believe that a crossover payment period 

should be assigned in a way that 

maximizes a student’s eligibility over 

the two award years in which the 

payment period is scheduled to occur. 

Initially, we proposed that a crossover 

payment period should be assigned to 

the award year in which the student 

receives the greater payment for the 

payment period based on the 

information available to the institution 

at the time of disbursement. If, 

subsequent to that date, the institution 

determines that the student would 

receive a greater payment for the 

payment period by reassigning the 

payment to the other award year, the 

institution may reassign the payment 

period to the other award year. 

The non-Federal negotiators objected 

to the mandatory assignment of a 

crossover payment period to the award 

year with the higher payment. They 

objected because, based on the student’s 

enrollment status in a term-based 

program, there may be a decrease in the 

overall amount the student would 

receive for the two award years of the 

crossover payment period. For example, 

a student is enrolled in a traditional 

semester-based program with an 

academic year that is defined, in part, as 

24 semester hours. The student attends 

half-time, 6 semester hours, for a 

summer term that must be assigned to 

the second award year due to the higher 

payment and enrolls for 12 semester 

hours in the fall semester. The student 

would not have earned the semester 

hours of the first academic year at the 

end of the fall semester. When the 

student enrolls full-time in the spring 

semester, the student is not yet eligible 

for a payment from the second 

Scheduled Award. Thus, the student 

would receive only the remaining onefourth of his or her first Scheduled 

Award, instead of a full payment of onehalf of a Scheduled Award. However, if 

the student’s summer crossover 

payment period were assigned to the 

first award year of the crossover 

payment period, the student would be 

eligible for a full payment of one-half of 

a Scheduled Award for that following 

spring semester. The difference for the 

spring semester between a payment of 

one-fourth of a Scheduled Award under 

the first approach, and one-half of a 

Scheduled Award under the second 

approach, would usually more than 

make up for the generally smaller 

amount that the student would receive 

for the summer term if it were assigned 

to the first award year. 

In addition, the non-Federal 

negotiators believed that determining 

the higher payment for the crossover 

payment period at the time of 

disbursement created significant 

administrative difficulties, since the 

higher disbursement amount might be 

determined not only by a change in the 

Scheduled Award for the award year, 

but also by a change in a student’s 

expected family contribution (EFC). As 

an alternative, they suggested that the 

determination of the higher amount be 

set based solely on the higher Payment 

or Disbursement Schedule. They 

believed that this approach would not 

require a financial aid administrator to 

track changes in a student’s EFC. 

As a result of the non-Federal 

negotiators’ concerns regarding the 

assignment of crossover payment 

periods for term-based programs, we 

provided an alternative proposal that is 

the basis for these proposed regulations. 

In the case of a half-time student or lessthan-half-time student, we do not 

believe the difference in the payments 

from each award year for a crossover 

payment period will usually be a 

significant amount. In these situations, 

we do not believe it would be necessary 

to mandate assignment based on the 

higher payment. In addition, in those 

circumstances where the assignment by 

the institution may not be to the 

student’s advantage, the student may 

request a determination by the 

institution of the assignment that would 

provide the student the greater amount 

of Federal Pell Grants over the two 

award years. The institution must 

comply with the student’s request and 

must reassign the crossover payment 

period if the reassignment would be 

expected to provide the student the 

greater amount of Federal Pell Grants 

over the two award years. 

With regard to a student enrolled at 

least three-quarter-time, we believe that, 

generally, a student would significantly 

benefit from a crossover payment period 

being assigned to the award year in 

which the student would receive the 

greater payment for the payment period. 

If a student is enrolled at least threequarter-time in a crossover payment 

period that is assigned to the second 

award year, the student would generally 

be able to complete the credit hours of 

an academic year in the next semester 

or next two quarters by taking slightly 

more than the minimum course load 

required for a full-time student and 

would be able to qualify for a full 

payment from the second Scheduled 

Award in the subsequent spring term. 

As in the case of a student enrolled halftime or less, the student may request 

that the institution assign the crossover 

payment period to the award year that 

would be expected to provide the 

student the greater amount of Federal 

Pell Grants over the two award years, 

and the institution must comply with 

the student’s request. 

Some of the non-Federal negotiators 

were concerned that the time for a 

determination of the award year to 

which a crossover payment period must 

be assigned may prevent institutions 

from closing out the earlier of the two 

award years in which the crossover 

payment period is scheduled to occur. 

They suggested that the proposed 

regulations include a provision for a 

deadline for such determinations. We 

agree that an institution must be able to 

close out the earlier award year in a 

timely manner, but we do not believe a 

specific reference is necessary in these 

proposed regulations. Sections 690.12, 

690.61(b), and 690.83 and 34 CFR part 

668.60 already provide the necessary 

authorities to establish deadlines for 

closing out application processing and 

Federal Pell Grant financial reporting 

for an award year. If a student’s higher 

payment for a crossover payment period 

is from the earlier award year, the 

application and financial reporting 

deadlines would still be applicable. If 

the determination occurred subsequent 

to those deadlines, no further action 

would be required of the institution. If 

a student’s higher payment for a 

crossover payment period is from the 

later award year, the applicable 

deadlines would be those for the later 

award year. 

The Department specifically invites 

public comment on the proposal to 

require institutions to initially place the 

crossover payment period in the award 

year that results in the payment of the 

higher amount to a student enrolled at 

least three-quarter-time (and to allow 

the student to request that the payment 

period be placed in the other award year 

if that placement would be expected to 

result in the student receiving a greater 

amount of Federal Pell Grant aid over 

the two award years in which the 

payment period is scheduled to occur). 

Further, the Department is interested in 

data from past practices and experiences 

of institutions in the placement of 

crossover payment periods and in 

whether, and to what degree, this 

proposal will burden or otherwise 

adversely affect institutions’ 

administration of the Federal Pell Grant 

Program. 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
42410 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

Payment From Two Scheduled Awards 

(§ 690.63(h)) 

Current Regulations: None. 

Proposed Regulations: Under 

§ 690.63(h) of the proposed regulations, 

if a student is eligible for the remaining 

portion of a first Scheduled Award in an 

award year and for a payment from the 

second Scheduled Award, the student’s 

payment would be calculated using the 

annual award for his or her enrollment 

status for the payment period. The 

student’s payment would be the 

remaining amount of the first Scheduled 

Award being completed plus an amount 

from the second Scheduled Award in 

the award year up to the total amount 

of the payment for the payment period. 

Reasons: In certain circumstances, a 

student may, within the same payment 

period, be completing his or her 

eligibility for the remaining balance of 

the first Scheduled Award in the award 

year while also having eligibility to 

receive a payment from the second 

Scheduled Award. We have identified 

two circumstances in which a student 

may be paid from two Scheduled 

Awards in a payment period. One 

circumstance would be if the institution 

determined, under proposed § 690.67(c), 

that a student was unable to earn the 

credits in the first academic year due to 

special circumstances beyond the 

control of the student. The other 

circumstance would be that a student 

completed the hours of the first 

academic year but had not received all 

of his or her first Scheduled Award. 

This provision would provide guidance 

to institutions in calculating a student’s 

payment for the payment period in 

these circumstances and would ensure 

that eligible students receive their 

awards. 

Maximum Federal Pell Grant for 

Children of Soldiers (§ 690.75(e)) 

Statute: Section 401(f)(4) of the HEA 

provides that a student whose parent or 

guardian died as a result of performing 

military service in Iraq or Afghanistan 

after September 11, 2001, is deemed to 

have a zero expected family 

contribution (EFC) for purposes of the 

Federal Pell Grant Program. The HEA 

further directs the Secretary of Veterans 

Affairs and the Secretary of Defense to 

provide necessary information to the 

Secretary of Education to carry out this 

provision. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 690.75(e), a student whose 

parent or guardian was a member of the 

Armed Forces of the United States and 

died as a result of performing military 

service in Iraq or Afghanistan after 

September 11, 2001, would 

automatically receive a zero EFC for 

purposes of the Federal Pell Grant 

Program if he or she was under 24 years 

old or enrolled in an institution of 

higher education at the time of the 

parent’s or guardian’s death. 

Reasons: These proposed regulations 

would implement the statutory 

provisions. Some of the negotiators 

objected to our initial proposal that a 

student must have an EFC in the 

numerical range that would make a 

student eligible for a Federal Pell Grant 

to qualify for a maximum Federal Pell 

Grant. The negotiators believed that the 

Secretary would be adding an additional 

student eligibility requirement that the 

statute did not provide. Based on the 

non-Federal negotiators objections and 

our belief that any student should 

receive a zero EFC if the student’s 

parent or guardian died as a result of 

performing military service in Iraq or 

Afghanistan after September 11, 2001, 

we removed the proposal that a student 

must have an initial Federal Pell Grant 

EFC that makes him or her eligible in 

order to qualify for a zero EFC under 

this provision. 

The non-Federal negotiators also 

objected to the Secretary’s position that 

an eligible student would be considered 

to have a zero EFC rather than the 

maximum Federal Pell Grant Scheduled 

Award. We do not agree. The statute 

explicitly states that an eligible student 

is deemed to have an EFC of zero. 

We are not proposing any regulations 

in relation to the Secretary of Veterans 

Affairs and the Secretary of Defense 

providing the necessary information to 

the Secretary of Education to carry out 

this provision, nor will this provision 

require any additional questions on the 

Free Application for Federal Student 

Aid (FAFSA). Once a student completes 

the FAFSA, the Secretary of Education 

will perform a data match with the 

Department of Defense and the 

Department of Veterans Affairs to 

confirm that the student had a parent or 

guardian who died as a result of 

performing military service in Iraq or 

Afghanistan after September 11, 2001. 

A tentative consensus was reached on 

these proposed regulations during the 

negotiations. 

Part 692 Leveraging Educational 

Assistance Partnership Program 

LEAP Program—Non-Federal Share 

(§ 692.10) 

Statute: Section 415C(b)(10) of the 

HEA, as amended by the HEOA, 

provides that the non-Federal share of 

the amount of student grants or workstudy jobs under the LEAP Program 

must be from State funds for the 

program and no longer requires that the 

non-Federal share must be from a direct 

appropriation of State funds. 

Current Regulations: Section 

692.10(b) references ‘‘State-appropriated 

funds’’ in the provisions concerning 

how the Secretary determines the 

number of students deemed eligible for 

purposes of calculating State allotments 

under § 692.10(a). 

Proposed Regulations: Proposed 

§ 692.10(b) would remove references to 

State funds being appropriated funds 

and would make technical corrections 

in § 692.10(a) to reflect that multiple 

programs are funded under part 692. 

Reasons: This proposal is necessary to 

implement section 415C(b)(10) of the 

HEA, as amended by the HEOA. 

Several members of the LEAP/GAP 

subcommittee raised concerns regarding 

whether we should define the term 

‘‘State funds’’ to clarify this change to 

the nature of the program’s matching 

funds. We did not agree that a definition 

was necessary. During the subcommittee 

discussions, we noted that the term 

‘‘State funds’’ only refers to cash funds, 

and this cash may be from Stateappropriated funds or may be from 

dedicated State revenues such as 

revenues from a State lottery or tuition 

revenues at a State’s public institutions 

of higher education used to provide 

grant aid. The term ‘‘State funds’’ would 

not include in-kind support to a student 

such as a tuition waiver at a public 

institution of higher education. ‘‘Inkind’’ support is not cash. If a State 

were to choose to use tuition revenues 

at public institutions, or some other 

sources of State cash, to meet its nonFederal share, use of this cash may 

affect information that the State must 

provide in its application to participate 

in the LEAP and GAP programs in 

addition to being included in the 

amount of funds reported for the nonFederal share. 

In addition, discussions of the LEAP/ 

GAP subcommittee noted that, in 

accordance with 34 CFR 80.24 of the 

Education Department General 

Administrative Regulations (EDGAR), 

other Federal funds generally may not 

be used to meet a State’s non-Federal 

share nor may a State use the same nonFederal funds to meet the non-Federal 

share of more than one Federal program. 

For example, tuition revenues at a 

public institution used to meet the nonFederal share of the LEAP Program may 

not be used by the institution to meet 

the matching requirement of the FSEOG 

Program. 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 42411 

Notification to Students of LEAP Grant 

Funding Sources (§ 692.21(k)) 

Statute: Section 415C(b)(11) of the 

HEA requires that a State notify eligible 

students that grants under the LEAP 

Program are (1) LEAP Grants and (2) are 

funded by the Federal Government, the 

State, and, where applicable, other 

contributing partners. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 692.21(k) would require that the State 

program notify eligible students that 

grants under the LEAP Grant Program 

are (1) LEAP Grants and (2) are funded 

by the Federal Government, the State, 

and, where applicable, other 

contributing partners. 

Reasons: The proposed regulations 

generally reflect the statutory language. 

Some LEAP/GAP subcommittee 

members questioned whether the 

regulations should reflect the extent to 

which States had flexibility in 

implementing this provision. While we 

noted in the discussions with the 

subcommittee that our intent is to 

provide maximum flexibility to the 

States in implementing this provision, 

we believe the statutory language as 

used in the proposed regulations 

inherently sets certain minimum 

standards. 

As was discussed by the 

subcommittee members, the State would 

need to ensure that students who 

receive a LEAP Grant are aware of the 

source of those funds. A State would 

need to establish a policy that would 

define the term ‘‘eligible student,’’ the 

State would use the policy to identify 

the students that the State would notify 

in accordance with the proposed 

regulations. A State may consider an 

‘‘eligible student’’ to be all students 

submitting an application, thus 

including potentially eligible students; 

we believe that this approach would 

minimize the State’s administrative 

burden. A State may consider an 

‘‘eligible student’’ to be students 

awarded LEAP Grants, or, at a 

minimum, recipients of LEAP Grants. 

Also, under the proposed regulations, 

notifications must be to individual 

students rather than general 

notifications; a State may use electronic 

media; and a State may rely on 

institutions as the agent of the State to 

provide the notifications. 

Some subcommittee members were 

concerned with whether it would be 

appropriate to revise the notification to 

say that the LEAP Grant ‘‘may be 

funded’’ by Federal, State, or, for 

purposes of the GAP Program, other 

contributing partners. We do not believe 

such an alteration is appropriate or 

necessary. The language in the required 

notice would accurately describe, for 

example, a grant that consisted solely of 

State funds or solely of Federal funds. 

In some cases, a State may not 

determine actual LEAP recipients at the 

time State grants are made, for example, 

if a State selects students considered to 

have received a LEAP Grant after the 

award year has ended. In this 

circumstance, the State would be 

expected to provide notices at least to 

all State grant recipients. 

In general, these same considerations 

apply to notifications for LEAP Grants 

made under the GAP Program in 

accordance with proposed 

§ 692.100(a)(8). 

Grants for Access and Persistence 

Program (Subpart C of Part 692 

Consisting of §§ 692.90 Through 

692.130) 

Statute: Section 415E of the HEA, as 

amended by the HEOA, authorizes the 

Grants for Access and Persistence (GAP) 

Program to assist States in establishing 

partnerships to provide eligible students 

with LEAP Grants under GAP to attend 

institutions of higher education. The 

GAP Program replaces the SLEAP 

Program previously authorized by 

section 415E of the HEA. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed part 692, subpart C, §§ 692.90 

through 692.130, we are proposing the 

regulations necessary to implement the 

GAP Program. The proposed regulations 

would— 

• Describe the definitions and other 

regulations that would apply to the GAP 

Program (See § 692.92); 

• Provide the requirements for 

participation in the GAP Program by 

students, States, degree-granting 

institutions of higher education, early 

information and intervention, 

mentoring, or outreach programs (early 

intervention programs), and 

philanthropic organizations or private 

corporations (See § 692.93); 

• Describe the requirements a State 

must satisfy, as the administrator of a 

partnership with institutions of higher 

education, early intervention programs, 

and philanthropic organizations or 

private corporations, to receive GAP 

Program funds (See § 692.94); 

• Describe the requirements that a 

State must meet to receive an allotment 

under this program, including 

submitting an application on behalf of a 

partnership and serving as the primary 

administrative unit of the partnership 

(See § 692.100); 

• Describe the responsibilities of the 

members of a State partnership in a 

State that receives a GAP allotment; (See 

§ 692.101) 

• Describe how the Secretary would 

allot funds to the States (See § 692.110); 

• Provide that the State must use at 

least 98 percent of the Federal funds 

received under the GAP Program to 

fund LEAP Grants under GAP and may 

use up to two percent of the Federal 

funds received for administrative 

expenses such as the establishment of a 

partnership, early notification to 

potentially eligible students and their 

families of their potential eligibility for 

student assistance including LEAP 

Grants under GAP, and issuing to 

students preliminary award 

notifications (See § 692.112); 

• Describe the requirements for funds 

matching the Federal allotment under 

the GAP Program (See § 692.113); 

• Describe the requirements for 

student eligibility under the GAP 

Program including that the student 

meets the relevant eligibility 

requirements in 34 CFR 668.32; has 

graduated from secondary school or, for 

a home-schooled student, has 

completed a secondary education; has 

financial need for a grant; and meets any 

additional requirements that the State 

may require for receipt of a LEAP Grant 

under GAP (See § 692.120); 

• Provide that a State may impose 

reasonable time limits for a student to 

complete his or her degree (See 

§ 692.120(c)(2)); and 

• Describe how a participating 

institution may request a waiver of 

statutory or regulatory requirements that 

would inhibit the ability of the 

institution to successfully and 

efficiently participate in the activities of 

the partnership (See § 692.130). 

Reasons: These proposed regulations 

are necessary to implement the 

provisions of section 415E of the HEA, 

as amended by the HEOA. 

Early Intervention Programs 

(§§ 692.94(a)(2)(ii), and 692.101(c)) 

Statute: Section 415E(c)(3) provides 

that a State agency apply for a GAP 

allotment with, among others, early 

intervention programs located in the 

State. Section 415E(c)(4)(C) requires that 

an early intervention program in a 

partnership must provide direct 

services, support, and information 

(direct services) to participating 

students. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 692.94(a)(2)(ii) provides that a State 

applying for a GAP allotment must 

establish a partnership that includes 

new or existing early intervention 

programs. Under proposed § 692.101(c), 

an early intervention program 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
42412 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

administered by a State or private 

organization is eligible to establish a 

partnership under the GAP Program, if 

the program provides direct services, 

support, and information to 

participating students. 

Reasons: These proposed regulations 

are necessary to implement section 

415E(c)(3) of the HEA and to clarify 

what is considered an eligible early 

intervention program. 

Members of the LEAP/GAP 

subcommittee were concerned that the 

proposed regulations did not define the 

direct services that would be expected. 

We did not believe such an expansion 

of the regulations is necessary but 

agreed to provide further clarification. 

Under these proposed regulations, early 

intervention services would include, but 

would not be limited to, direct services 

such as after-school and summer-school 

tutoring, test preparation, assistance in 

obtaining summer jobs, career 

mentoring, a summer-bridge 

component, i.e., a precollege campus 

experience, and academic, personal and 

career counseling. These services may 

be provided through electronic media if 

the electronic media would be 

appropriate to the direct service 

provided and would interactively and 

directly engage individual students. 

Disseminating literature, or providing 

informational Web sites, would not 

qualify as direct services. 

Members of the LEAP/GAP 

subcommittee also questioned the 

minimum number of early intervention 

programs that must be in a State 

partnership. Under these proposed 

regulations, a State partnership would 

be required to have more than one 

program that offers an early intervention 

component. Section 415E(c)(3) of the 

HEA, which the regulations mirror, 

refers to early information and 

intervention, mentoring, or outreach 

programs, suggesting that more than one 

of these types of programs must be 

included in the GAP Partnership. We 

believe the proposed regulations are 

consistent with the statute. A State or 

private organization that has a single 

early intervention program that includes 

several components or programs within 

its structure would satisfy the 

requirement of having more than one 

early intervention program. 

Persistence to Degree Completion 

(§ 692.100(a)(6)) 

Statute: Section 415E(c)(1)(B)(vi) of 

the HEA provides that a State’s 

application for a GAP allotment must 

include a description of the steps the 

State would take to ensure that students 

who receive LEAP Grants under GAP 

would persist to degree completion. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.100(a)(6), a State must 

include in its application the steps it 

plans to take to ensure, to the extent 

practicable, that students who receive a 

LEAP Grant under GAP would persist to 

degree completion. 

Reasons: Proposed § 692.100(a)(6) is 

necessary to implement section 

415E(c)(1)(B)(vi) of the HEA. 

Some members of the LEAP/GAP 

subcommittee believed that the 

proposed regulations should directly 

address eligible students attending 

nonparticipating institutions of higher 

education. We do not agree. For a State 

that provides a LEAP Grant under GAP 

to an eligible student attending a 

nonparticipating institution of higher 

education, we would expect the State to 

obtain a signed assurance from the 

nonparticipating institution. The 

nonparticipating institution would 

assure the State that it would follow the 

State’s plan established in the State’s 

GAP application. 

Notification to Students of LEAP Grant 

Funding Sources (§ 692.100(a)(8)) 

Statute: Section 415E(c)(1)(B)(viii) of 

the HEA requires that a State notify 

eligible students that grants are (1) 

LEAP Grants and (2) are funded by the 

Federal Government; the State; and, 

where applicable, other contributing 

partners. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.100(a)(8) a State GAP 

Program is required to notify eligible 

students that the grants they receive 

under GAP are LEAP Grants and that 

the grants are funded by the Federal 

Government; the State; and where 

applicable, other contributing partners. 

Reasons: Section 415E(c)(1)(B)(viii) of 

the HEA for the GAP Program, which 

these proposed regulations implement, 

is basically the same as section 

415C(b)(11) of the HEA for the LEAP 

Program. The reasons for these proposed 

regulations are the same as those 

reasons described for the LEAP Program 

proposed regulations as discussed under 

proposed § 692.21(k). 

For a LEAP Grant under GAP, a State 

may include this notification in the 

award notification required under 

proposed § 692.111(e). The notifications 

would apply to LEAP Grants under GAP 

that are funded by in-kind contributions 

as well as those funded by the Federal 

allotment or cash contributions to the 

non-Federal share. 

Recruiting Eligible Students 

(§ 692.101(b)(2)) 

Statute: Section 415E(c)(4)(B)(i)(I) of 

the HEA provides that an institution of 

higher education in a GAP partnership 

must recruit and admit participating 

qualified students and provide 

additional grant aid as agreed to with 

the State agency. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.101(b)(2), a degreegranting institution of higher education 

that is in a partnership under the GAP 

Program must recruit, admit, and 

provide institutional grant aid to 

participating eligible students as agreed 

to with the State agency. 

Reasons: The proposed regulations 

generally reflect the language in section 

415E(c)(4)(B)(i)(I) of the HEA. Some 

LEAP/GAP subcommittee members 

were concerned that the regulations may 

adversely affect the admissions 

standards of participating institutions. 

We believe that under these proposed 

regulations institutions and States 

would have broad discretion regarding 

what may be included in an agreement, 

e.g., there is no requirement that an 

institution must waive its admissions 

standards. 

GAP and SLEAP Allotments (§§ 692.70 

and 692.110) 

Statute: Section 415E(b) of the HEA, 

as amended by the HEOA, provides that 

the Secretary makes an allotment under 

the GAP Program to each State that 

submits an application to meet the costs 

of the Federal share of the State’s GAP 

Program. The statute requires that, in 

making a continuation award for a State, 

the Secretary would make an allotment 

to the State that is not less than the 

allotment made to the State in the 

previous fiscal year and further provides 

that the Secretary give priority to a State 

that applies for an allotment in 

partnerships with degree-granting 

institutions whose combined full-time 

enrollment represents a majority of all 

students attending institutions of higher 

education in the State. 

Section 415E(g) of the HEA, as 

amended by the HEOA, provides that 

the LEAP Program provisions that are 

not inconsistent with GAP requirements 

apply to GAP. 

For the programs authorized under 

part A, subpart 4 of title IV of the HEA, 

including the GAP Program, section 

415B of the HEA provides that 

allotments are based on the ratio that 

the number of eligible students in a 

State bears to the number of eligible 

students in all the States except that no 

State may receive less than the State 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 42413 

received for fiscal year 1979 (1979–1980 

award year). Section 415B of the HEA 

further provides that any allotted funds 

not required by a State may be realloted 

to other States in proportion to the 

original allotments to these other States. 

Section 415A(b) of the HEA, as 

amended by the HEOA, provides that 

the amount of the annual appropriation 

for the LEAP and GAP programs that is 

in excess of $30,000,000 must be made 

available to carry out the GAP Program. 

Section 415E(j) of the HEA, as 

amended by the HEOA, provides that 

for the two-year period that begins on 

August 14, 2008, the date of enactment 

of the HEOA, a State may continue to 

make grants under the SLEAP Program, 

i.e., through the 2010–2011 award year. 

Current Regulations: There are no 

current regulations for the GAP 

Program. Section 692.70 provides that 

funds are allotted to States applying 

under the SLEAP Program in 

accordance with § 692.10. 

Proposed Regulations: Proposed 

§ 692.110(a)(1) would apply to the GAP 

Program the allotment formula 

authorized under section 415B of the 

HEA and used to allot a State’s Federal 

LEAP funds under § 692.10(a) for a 

fiscal year. 

Proposed § 692.110(a)(2) would 

provide priority to qualifying States by 

increasing the number of eligible 

students in a State to 125 percent in 

determining the ratio for allotting funds 

for a fiscal year. This provision would 

apply to a State that meets the 

requirements under proposed 

§ 692.113(b) for reduced State matching 

because the State is applying for an 

allotment in partnership with degreegranting institutions whose combined 

full-time enrollment represents a 

majority of all students attending 

institutions of higher education in the 

State. 

In some years, sufficient funds may be 

available to allot to each State that 

participated in the prior fiscal year a 

continuation award that is the same 

amount of Federal GAP funds as were 

allotted in the prior fiscal year, but are 

not sufficient both to allot at least the 

same amount of Federal GAP funds 

allotted in the prior year to these States 

and also to allot funds to additional 

States in accordance with the ratio used 

to allot the States’ Federal LEAP funds 

under § 692.10(a). For these 

circumstances we are proposing 

§ 692.110(a)(3)(i) that would provide to 

each State that participated in the prior 

fiscal year a continuation award in the 

amount the State received in the prior 

fiscal year. From the remaining Federal 

GAP funds, new applicants would be 

allotted an amount based on the ratio 

used to allot the State’s Federal LEAP 

funds under § 692.10(a). 

Insufficient funds may be available to 

allot a continuation award that is at 

least the amount of Federal GAP funds 

that were allotted to each State in the 

prior fiscal year. In this circumstance, 

proposed § 692.110(a)(3)(ii) would 

provide that each State would receive 

an allotment that bears the same ratio to 

the amount of Federal GAP funds 

available as the amount of Federal GAP 

funds allotted to each State in the prior 

fiscal year bears to the amount of 

Federal GAP funds allotted to all States 

in the prior fiscal year. 

Proposed § 692.110(b) provides that 

we would reallot funds available for 

reallotment in a fiscal year in 

accordance with the provisions of 

proposed § 692.110(a) that were used to 

calculate initial allotments for the fiscal 

year. 

Proposed § 692.110(c) provides that 

any funds made available for GAP but 

not expended in a fiscal year may be 

allotted or reallotted under the LEAP 

Program. 

Proposed § 692.70 would clarify that, 

for fiscal year 2010 (2010–2011 award 

year), we would allot funds to States 

applying under the SLEAP Program in 

accordance with § 692.10 prior to 

calculating allotments to States applying 

for GAP funds under proposed subpart 

C of part 692. 

Reasons: Except to carry out 

provisions specific to GAP, we are 

proposing to apply the allotment 

formulas applicable to the LEAP 

Program. This proposal is in accordance 

with section 415E(g) of the HEA, as 

amended by the HEOA, that provides 

that the LEAP Program provisions that 

are not inconsistent with GAP 

requirements apply to GAP. 

Two specific provisions of GAP 

would modify the allotment formulas 

used for the LEAP Program. One 

provision gives priority to States that 

apply for an allotment in partnerships 

with degree-granting institutions whose 

combined full-time enrollment 

represents a majority of all students 

attending institutions of higher 

education in the State. The other 

provision provides that a State’s GAP 

allotment may not be less than the 

allotment made to the State in the 

previous year. 

We propose to implement the funding 

priority in proposed § 692.110(a)(2) by 

providing that the State’s enrollment of 

eligible students would be 125 percent 

of its eligible students in applying the 

allotment formula to all States. We 

believe that the proposed 125 percent 

fulfills the statutory provision while 

providing that all eligible States have an 

opportunity to qualify for funding under 

the allotment formula. 

For continuing awards, there may be 

a year in which there are sufficient 

funds available to allot to each State that 

participated in the prior fiscal year the 

same amount of Federal GAP funds that 

were allotted in the prior fiscal year, but 

insufficient funds are available both to 

allot the same amount of Federal GAP 

funds to these continuing States as in 

the prior year and to allot additional 

funds to additional States in accordance 

with the ratio used to allot the States’ 

Federal LEAP funds. For these 

circumstances, we believe it is in 

accordance with the statute to provide 

continuing States with the same 

allotment as received in the prior fiscal 

year as proposed in § 692.110(a)(3)(i). 

Additional applicants would receive an 

allotment based on applying to the 

remaining available funds the allotment 

formula used to allot the States’ Federal 

LEAP funds. 

Another circumstance affecting 

continuing awards would be a year for 

which there are insufficient funds 

available to allot a continuation award 

that is at least the amount of Federal 

GAP funds allotted to each State in the 

prior year. Proposed § 692.110(a)(3)(ii) 

would provide that we ratably reduce 

the allotment of each State in proportion 

to its prior year funding. Under this 

proposal we would allot to each State an 

amount that would bear the same ratio 

to the amount of Federal GAP funds 

available as the amount of Federal GAP 

funds allotted to each State in the prior 

fiscal year bears to the amount of 

Federal GAP funds allotted to all States 

in the prior fiscal year. This proposal 

would ensure that, to the extent 

practicable, a State with an allotment in 

the prior fiscal year would receive, at 

least proportionately, the same 

allotment as in the prior year. 

Proposed § 692.110(b) provides that 

we would reallot available funds in a 

fiscal year in accordance with the 

provisions of proposed § 692.110(a) that 

were used to calculate initial allotments 

for the fiscal year, and under proposed 

§ 692.110(c) any funds made available to 

GAP but not expended would be 

allotted or reallotted under the LEAP 

Program. We believe that applying the 

provisions for realloting funds as 

authorized under section 415B of the 

HEA is not inconsistent with the 

provisions of GAP and, therefore, must 

be applied to GAP allotments in 

accordance with section 415E(g) of the 

HEA. In addition we believe that it 

would be consistent with the provisions 

of section 415A(b) of the HEA to allot 

or reallot funds under the LEAP 


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42414 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

Program that were previously made 

available to GAP but not expended. 

We are proposing to amend § 692.70 

of the SLEAP Program to implement the 

provisions of section 415E(j) of the HEA 

for fiscal year 2010 (2010–2011 award 

year). As a practical matter, no State was 

able to participate in the GAP Program 

in fiscal year 2009 (2009–2010 award 

year), and these procedures are 

necessary only for fiscal year 2010. 

In proposed appendix A to subpart C 

of part 692, we are providing a case 

study that would illustrate the proposed 

requirements for allotting funds under 

the GAP Program, including the 

provisions implementing the funding 

priority, continuation awards, and 

SLEAP Program funding during the 

transition period of fiscal year 2010 (the 

2010–2011 award year) when a State 

may continue to participate in the 

SLEAP Program in lieu of GAP Program 

participation. Apart from State 

enrollments for fiscal year 1979 used in 

the allotment formula, nothing in the 

case study should be considered to 

reflect any State’s actual circumstances 

or the expected results for any State. 

Non-Federal Matching Funds 

(§ 692.113(a)(2)) 

Statute: Section 415E(b)(2) of the HEA 

provides that the non-Federal matching 

funds for a State’s GAP Program may be 

cash or a noncash, in-kind contribution 

that has monetary value and helps a 

student meet the cost of attendance at 

an institution of higher education. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.113(a)(2), a State may 

include cash or in-kind contributions as 

non-Federal matching funds of a State 

partnership under the GAP Program. An 

in-kind contribution must be fairly 

evaluated; have monetary value, such as 

a tuition waiver; and be considered 

estimated financial assistance under 34 

CFR 673.5(c). 

Reasons: These proposed regulations 

would implement the provisions of 

section 415E(b)(2) of the HEA. 

Members of the LEAP/GAP 

subcommittee noted the need to clarify 

the qualifying matching funds, 

including the in-kind contributions that 

may qualify as matching funds to make 

LEAP Grants under GAP to eligible 

students. 

Cash that qualifies as matching funds 

may include, but is not limited to, Stateappropriated funds or other State funds 

such as funds from a State lottery or 

tuition revenue at public institutions of 

higher education. Matching cash may 

also be grants to students provided by 

private institutions or philanthropic 

organizations or private corporations. 

An in-kind contribution is a noncash 

contribution that has monetary value, 

such as a tuition waiver, the provision 

of room and board, transportation 

passes, or other provisions that help a 

student meet the cost of attending an 

institution of higher education. The 

proposed regulations would further 

clarify that an in-kind contribution must 

be considered to be estimated financial 

assistance under 34 CFR 673.5(c). As in 

the case of matching cash, matching inkind contributions may be provided by 

the State, institutions of higher 

education, or philanthropic 

organizations or private corporations. 

Regardless of whether the funds are 

cash or are an in-kind contribution, 

funds would qualify as matching funds 

only if awarded in accordance with the 

GAP Program requirements, and the 

matching funds would be considered 

title IV, HEA program assistance. For 

example, if a student receiving a tuition 

waiver did not graduate from secondary 

school, as required under § 692.120(a)(2) 

to qualify as an eligible student for a 

LEAP Grant under GAP, the amount of 

the tuition waiver could not qualify as 

matching funds for the non-Federal 

share of a State’s GAP Program nor 

would it qualify as title IV, HEA 

program assistance. If another student 

receiving a tuition waiver graduated 

from secondary school and was 

otherwise eligible for a LEAP Grant 

under GAP, the amount of this other 

student’s tuition waiver would qualify 

as matching funds for the non-Federal 

share of a State’s GAP Program and as 

title IV, HEA program assistance. 

Nothing in these proposed regulations 

would require a State to provide LEAP 

Grants under GAP to meet all costs of 

attendance. As with LEAP Grants under 

subpart A of this part, a State may, for 

example, restrict a LEAP Grant under 

GAP to meeting a student’s tuition and 

fees. The restriction could apply to 

funds from both the Federal allotment 

and both cash and in-kind contributions 

toward the non-Federal share. 

In accordance with 34 CFR 80.24 of 

EDGAR, generally other Federal funds 

may not be used to meet a State’s nonFederal share nor may a State use the 

same non-Federal funds to meet the 

non-Federal share of more than one 

Federal program. For instance, nonFederal funds used to match the Gaining 

Early Awareness and Readiness for 

Undergraduate (GEAR UP) Program may 

not be used as matching funds for the 

GAP Program because those non-Federal 

funds were already used to match 

another Federal program. However, 

those non-Federal funds would be 

included in the State’s base-year and 

maintenance of effort requirements 

under proposed § 692.100(f) and (g). 

Enrollment and the Amount of State 

Match (§ 692.113(b)) 

Statute: Section 415E(b)(2) of the HEA 

provides that the amount of the nonFederal matching funds for a State’s 

GAP Program is based on the full-time 

equivalent enrollment of the institutions 

of higher education participating in the 

State’s partnership. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.113(b), the non-Federal 

match of the Federal allotment must be 

forty-three percent of the expenditures 

under this subpart if a State applies for 

a GAP allotment in partnership with 

degree-granting institutions of higher 

education in the State whose combined 

full-time enrollment represents less than 

a majority of all students attending 

institutions of higher education in the 

State, or thirty-three and thirty-four onehundredths percent of the expenditures 

under this subpart if a State applies for 

a GAP allotment in partnership with 

degree-granting institutions of higher 

education in the State whose combined 

full-time enrollment represents a 

majority of all students attending 

institutions of higher education in the 

State. 

Reasons: These proposed regulations 

would implement the provisions of 

section 415E(b)(2) of the HEA. Members 

of the LEAP/GAP subcommittee 

believed that the number of students 

used in determining these percentages 

should include both in-State and out-ofState students. We agree. 

Base-year Requirement (§ 692.100(f)) 

Statute: Section 415E(i) of the HEA 

provides that in determining a State’s 

share of the costs of the State’s GAP 

Program, the State may consider only 

those expenditures from non-Federal 

sources that exceed the State’s total 

expenditures for need-based grants, 

scholarships, and work-study assistance 

for fiscal year 1999. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.100(f), the State must 

provide an assurance that the nonFederal funds used as matching dollars 

under the State’s GAP Program is in 

excess of what the State spent in fiscal 

year 1999 on need-based grants, 

scholarships, and work-study 

assistance. 

Reasons: Section 415E(i) of the HEA 

and proposed § 692.100(f) are identical 

to the base-year provisions for the 

previously authorized SLEAP Program. 

Proposed § 692.100(f) would consider 

the same fiscal year 1999 expenditures 


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from the same need-based grant, 

scholarship, and work-study programs a 

State operated in fiscal year 1999. Thus, 

the amount of a State’s expenditures in 

fiscal year 1999 as determined for the 

SLEAP Program would be the same 

amount applicable for the State under 

these proposed regulations for the GAP 

Program. 

Maintenance-of-Effort Requirement 

(§ 692.100(g)) 

Statute: Section 415E(h) of the HEA 

provides that the aggregate amount 

expended by a State per student, or the 

aggregate expenditures by the State, for 

funds derived from non-Federal sources, 

for the authorized activities under 

section 415E(d) of the HEA for the 

preceding fiscal year were not less than 

the amount expended per student or the 

aggregate expenditure by the State for 

these authorized activities for the 

second preceding fiscal year. The 

authorized activities under section 

415E(d) of the HEA include making 

LEAP Grants under GAP and certain 

administrative expenses. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.100(g), the State must 

provide an assurance that it meets the 

GAP maintenance-of-effort (MOE) 

requirement. Under the GAP MOE 

requirement, for the fiscal year prior to 

the fiscal year for which the State is 

requesting Federal funds, the amount 

the State expended from non-Federal 

sources per student, or the aggregate 

amount the State expended, for all the 

authorized activities in § 692.111, i.e., 

making LEAP Grants under GAP and 

certain administrative expenses for the 

GAP Program, will be no less than the 

amount the State expended from nonFederal sources per student, or in the 

aggregate, for those activities for the 

second fiscal year prior to the fiscal year 

for which the State is requesting Federal 

funds. 

Reasons: Section 415E(h) of the HEA 

and proposed § 692.100(g) are 

essentially the same as the MOE 

provisions for the previously authorized 

SLEAP Program except that the GAP 

MOE provision is concerned only with 

expenditures for GAP program 

activities. Because States can only 

participate in the GAP Program starting 

in the 2010–2011 award year, the total 

State expenditures for authorized GAP 

activities for the 2008–2009 and 2009– 

2010 award years would be zero. A 

State’s MOE would not be relevant to 

qualifying for a GAP allotment until 

fiscal year 2012 (the 2012–2013 award 

year). 

Note that although the statute and 

regulations refer to funding in terms of 

a fiscal year, States receive LEAP, 

SLEAP, and GAP funds operationally on 

an award year (July 1 through June 30) 

basis. Therefore, a State’s MOE and 

matching requirements are also 

measured on an award year basis. 

Student Eligibility—Secondary School 

Graduate (§ 692.120(a)(2)) 

Statute: Section 

415E(d)(2)(B)(i)(V)(bb) of the HEA 

provides that a student must graduate 

from secondary school to be eligible for 

a LEAP Grant under GAP. 

Current Regulations: None. 

Proposed Regulations: Under 

proposed § 692.120(a)(2), to be eligible 

for a LEAP Grant under GAP, a student 

must graduate from secondary school or, 

for a home-schooled student, must 

complete a secondary education. 

Reasons: Proposed § 692.120(a)(2) is 

necessary to implement section 

415E(d)(2)(B)(i)(V)(bb) of the HEA. We 

believe that a home-schooled student 

who completes a secondary education 

would satisfy the statutory requirement 

that a student graduate from secondary 

school. However, a student who passed 

an approved ability-to-benefit test or 

obtained a General Educational 

Development (GED) certificate would 

not satisfy the statutory provision and 

would not qualify as an eligible student 

for a LEAP Grant under GAP. 

Student Eligibility—State’s Maximum 

LEAP Program Award 

(§ 692.120(a)(3)(ii)(B)) 

Statute: Section 415E(d)(3)(A)(ii) of 

the HEA provides that a student is 

eligible for a LEAP Grant under GAP if 

the student qualifies for the State’s 

maximum undergraduate LEAP Grant 

under the LEAP Program as authorized 

under section 415(C)(b) of the HEA. 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 692.120(a)(3)(ii)(B) would provide 

that, in an award year in which a 

student is receiving an additional LEAP 

Grant under GAP, a student’s eligibility 

may be based, in part, on qualifying for 

a State’s maximum undergraduate 

award for LEAP Grants under the LEAP 

Program in accordance with subpart A 

of part 692. 

Reasons: Proposed 

§ 692.120(a)(3)(ii)(B) is necessary to 

implement section 415E(d)(3)(A)(ii) of 

the HEA. Members of the LEAP/GAP 

subcommittee were concerned that a 

State’s LEAP Program may not have a 

single maximum award amount. They 

were also concerned that a student may 

qualify for a maximum award but not 

receive the maximum amount. We agree 

that a student may qualify for the State’s 

maximum LEAP Grant under the LEAP 

Program in a State that may have more 

than one maximum award amount 

without qualifying for the highest of the 

maximum awards, e.g., a State may have 

different maximum awards for 

attendance at public and private 

institutions. In these cases, a student’s 

maximum award is based on the 

maximum award amount established for 

the applicable category or program 

under which the student qualifies. We 

agree that a student would meet this 

requirement if the student qualifies for 

the State’s maximum undergraduate 

award but does not actually receive the 

full amount of the maximum award. 

Executive Order 12866 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Secretary must determine whether the 

regulatory action is ‘‘significant’’ and 

therefore subject to the requirements of 

the Executive Order and subject to 

review by the 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 

set forth in the Executive order. 

Pursuant to the terms of the Executive 

order, it has been determined this 

proposed regulatory action will have an 

annual effect on the economy of more 

than $100 million. Therefore, this action 

is ‘‘economically significant’’ and 

subject to OMB review under section 

3(f)(1) of Executive Order 12866. 

Virtually all of the economic impact 

associated with these proposed 

regulations flows from proposed 

§ 690.67 (implementing the statutory 

provision in section 401(a)of the HEOA) 

allowing the award of two Pell Grants in 

one year for students who wish to 

accelerate their program of study. 

Outside of this provision, the cost of 

which is driven almost entirely by 

explicit statutory requirements, these 

proposed regulations would not be 

considered ‘‘economically significant.’’ 


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The Secretary has assessed the potential 

costs and benefits of this regulatory 

action and has determined that the 

benefits justify the costs. 

Need for Federal Regulatory Action 

These proposed regulations are 

needed to implement provisions of the 

HEA, as amended by the HEOA, related 

to changes to the Federal grant and 

work-study programs, campus safety, 

educational programs for students with 

intellectual disabilities, copyright 

infringement, teach-outs, readmission of 

servicemembers, and non-Title IV 

revenue. 

In general, these regulations simply 

restate specific HEOA requirements, in 

many cases using language drawn 

directly from the statute, or make 

technical changes to conform with 

statutory requirements or other 

regulations. In the following areas, the 

Secretary has exercised limited 

discretion in implementing the HEOA 

provisions in these proposed 

regulations: 

Definition of baccalaureate liberal 

arts programs offered by proprietary 

institutions: The Secretary determined 

that, to meet the statutory requirement 

that an institution offer a program, a 

liberal arts program must be an 

organized program of study that is 

essentially the same for all students, 

except that it could include some 

elective courses. 

Readmission requirements for 

servicemembers: The Secretary 

determined that the statute applies both 

to a student who began attendance at an 

institution and left because of service in 

the uniformed services and to a student 

admitted to an institution who did not 

begin attendance because of service in 

the uniformed services. The Secretary 

defined ‘‘promptly readmit’’ as 

readmitting a student into the next class 

or classes in the student’s program 

unless the student requests a later date 

of admission, or unusual circumstances 

require the institution to admit the 

student at a later date. 

Non-title IV revenue requirement (90/ 

10)—institutional eligibility and 

sanctions: The Secretary determined 

that an institution has 45 days after the 

end of its fiscal year to notify the 

Department if it failed the 90/10 

requirement. 

Non-title IV revenue requirement (90/ 

10)—calculating revenue percentage: 

The Secretary identified types of nontitle IV eligible programs from which an 

institution could count, as revenue, 

funds paid for students taking those 

programs; identified elements to 

distinguish an institutional loan from 

other student account receivables; and 

set criteria to allocate excess loan funds 

treated as non-Federal revenue to each 

payment period. 

Net present value: As discussed more 

fully in the net present value discussion 

in this preamble, the Secretary 

established a formula for institutions to 

use in calculating the net present value 

of institutional loans made during a 

fiscal year for the purpose of counting 

those loans as non-Federal revenue. As 

an alternative, the proposed regulations 

would also allow an institution to use 

50 percent of the total amount of loans 

it made during the fiscal year as the 

NPV, provided that none of these loans 

are sold until they have been in 

repayment for at least two years. 

Institutional plans for improving the 

academic program: While requiring 

institutions to provide prospective and 

enrolled students information about 

plans for improving the institution’s 

academic program, the Secretary 

determined that institutions themselves 

are in the best position to determine 

what defines a plan, including when a 

plan becomes a plan subject to 

dissemination under this provision. 

Peer-to-peer file sharing/copyrighted 

material: The Secretary determined that 

in implementing statutory requirements 

intended to reduce the unauthorized 

distribution of copyrighted material, 

institutions must incorporate at least 

one technological deterrent; must 

inform users that the unauthorized 

distribution of copyrighted material is 

illegal, what actions constitute illegal 

distribution of copyrighted material, 

and the potential penalties for doing so; 

and must use relevant assessment 

criteria to evaluate how effective its 

plans are in combating the unauthorized 

distribution of copyrighted materials by 

users of the institution’s networks. 

Consumer Information: The Secretary 

determined that institutions must 

identify the source of the information 

disclosed, as well as the time frames 

and methodology associated with that 

information; that institutions must 

disclose the retention rate as reported to 

the Integrated Postsecondary Education 

Data System (IPEDS); that, with limited 

exceptions, institutions must 

disaggregate completion and graduation 

rate data by gender, by major racial and 

ethnic subgroup, and by whether or not 

the institution’s students received 

certain types of Federal student aid; and 

that, in cases where 20 percent or more 

of the certificate- or degree-seeking, fulltime, undergraduate students at an 

institution left school to serve in the 

Armed Forces, to serve on official 

church missions, or to serve with a 

foreign aid service of the Federal 

Government (such as the Peace Corps), 

the institution may recalculate the 

completion or graduation rate of those 

students by adding the time period of 

service to the 150 percent time frame 

they normally have to complete or 

graduate. 

Campus Safety Provisions—Hate 

Crime Reporting: The Secretary 

determined that the current FBI’s Hate 

Crime Data Collection Guidelines in the 

Uniform Crime Reporting Handbook 

should be used to define the hate crimes 

to be reported. 

Campus Safety Provisions—Definition 

of Test: The Secretary defines test for 

purposes of emergency response and 

evacuation procedures as regularly 

scheduled drills, exercises, and 

appropriate follow-through activities, 

designed for assessment and evaluation 

of emergency plans and capabilities. 

Campus Safety Provisions—Annual 

Security Report/Emergency Response 

and Evacuation Procedures: The 

Secretary determined that institutions 

must include a statement of policy 

regarding their emergency response and 

evacuation procedures in the annual 

security report beginning with the 

annual security report distributed by 

October 1, 2010. The Secretary 

established these emergency response 

procedures to ensure institutions are 

prepared for an emergency situation on 

campus. These procedures include 

testing procedures to identify and 

improve weaknesses and procedures to 

providing emergency information to the 

campus and larger community, such as 

parents. 

Campus Safety Provisions—Timely 

Warning and Emergency Notification: 

The Secretary determined that a timely 

warning must be issued in response to 

crimes specified in the regulations and 

that an emergency notification is 

required in the case of an immediate 

threat to the health or safety of students 

or employees occurring on campus, 

covering a broader scope of situations 

than those covered by the timely 

warning requirement. 

Campus Safety Provisions—Annual 

Security Report/Emergency Response 

and Evacuation Procedures/Definition 

of On-Campus Student Housing Facility: 

The Secretary defines the term oncampus student housing facility to mean 

a dormitory or other residential facility 

for students that is located on an 

institution’s campus, as defined in 

§ 668.46(a). 

Campus Safety Provisions—Annual 

Security Report/Missing Student 

Notification Policy: The Secretary 

determined that the annual security 

report must include information about 

missing student policies and 

procedures. 


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Campus Safety Provisions—Missing 

Student Notification Policy: The 

Secretary determined that institutional 

missing student notification policies 

must include a list of the titles of the 

persons or organizations to which a 

student should be reported missing, 

must allow students to register in a 

confidential manner a contact person to 

be notified within 24 hours if they are 

reported missing, must inform students 

that their parent or guardian will be 

notified if they are under eighteen and 

not an emancipated minor, and must 

inform students that law enforcement 

will be notified within 24 hours if the 

student has been determined to be 

missing for 24 hours. 

Campus Safety Provisions—Annual 

Fire Safety Report: The Secretary 

included definitions for cause of fire, 

fire, fire drill, fire-related injury, firerelated death, fire-safety system, and 

value of property damage to enable 

comparability across institutions of the 

statistics that institutions are required to 

report. Additionally, institutions must 

submit statistics to the Department in 

their annual fire safety report and must 

provide data for the three most recent 

calendar years for which data are 

available, with reporting requirements 

phased in beginning with the collection 

of calendar year 2009 statistics for 

inclusion in the October 1, 2010 Annual 

Fire Safety Report. 

Financial Assistance for Students 

with Intellectual Disabilities: The 

Secretary determined that a 

comprehensive transition and 

postsecondary program for students 

with intellectual disabilities must be 

delivered to students who physically 

attend the institution and that such a 

program must provide opportunities for 

students with intellectual disabilities to 

participate in coursework and other 

activities with students without 

disabilities. 

Work-Study: The Secretary 

determined that written authorizations 

from students will no longer be required 

before an institution can credit a 

student’s account or hold a credit 

balance for the student. 

TEACH Grant Program Periods of 

Suspension and Discharge of Agreement 

to Serve: The Secretary determined that 

a TEACH Grant recipient’s teaching 

service obligation should be discharged 

in cases when the recipient cannot 

comply with his or her agreement to 

teach because of a call or order to active 

military duty for an extended period of 

time. 

Two Federal Pell Grants in an Award 

Year: The Secretary determined that a 

student would be eligible for a second 

Scheduled Award if the student has 

earned in an award year at least the 

credit or clock hours of the first 

academic year of the student’s eligible 

program, and is enrolled as at least a 

half-time student in a program leading 

to a bachelor’s or associate degree or 

other recognized educational credential, 

except as provided for students with 

intellectual disabilities. The Secretary 

determined that a financial aid 

administrator may, on an individual 

basis, waive the requirement that a 

student complete the credit or clock 

hours in the student’s first academic 

year in the award year due to special 

circumstances beyond the student’s 

control. The Secretary determined that 

in calculating a transfer student’s 

eligibility to receive a second Scheduled 

Award, an institution determines the 

credit or clock hours the student has 

earned at a prior institution during the 

award year based on the Federal Pell 

Grant disbursements that the student 

received at the prior institution during 

the award year in relation to the 

student’s Scheduled Award at that prior 

institution. 

The Secretary determined that if a 

student is enrolled as a three-quartertime or full-time student, an institution 

must consider a crossover payment 

period, i.e., a payment period that 

occurs in two award years, to be in the 

award year in which the student would 

receive the greater payment for the 

payment period based on the 

information available at the time that 

the student’s Federal Pell Grant is 

initially calculated. If the institution 

subsequently receives information that 

the student would receive a greater 

payment for the payment period by 

reassigning the payment to the other 

award year, the institution would be 

required to reassign the crossover 

payment to the award year providing 

the greater payment. 

A student may request that the 

institution place the payment period in 

the award year that can be expected to 

result in the student receiving a greater 

amount of Federal Pell Grants over the 

two award years in which the payment 

period is scheduled to occur. If the 

student makes that request, the 

institution must assign the payment 

period to that award year. 

Maximum Federal Pell Grant for 

Children of Soldiers: The Secretary 

determined that a student whose parent 

or guardian died as a result of 

performing military service in Iraq or 

Afghanistan after September 11, 2001 is 

deemed to have a zero expected family 

contribution (EFC) for the Federal Pell 

Grant Program. 

Regulatory Alternatives Considered 

This section addresses the alternatives 

that the Secretary considered in 

implementing the discretionary portions 

of the HEOA provisions. Except where 

noted, alternatives considered did not 

have a measurable effect on Federal 

costs. These alternatives are discussed 

in more detail in the Reasons sections 

of this preamble related to the specific 

regulatory provisions. 

Campus-Safety Provisions: In general, 

the Secretary adopted alternatives that 

maximized the availability of 

information provided to students and 

parents while avoiding unnecessary 

burden on institutions. Specific 

examples of this process are discussed 

in the Reasons sections accompanying 

individual regulatory provisions. 

Two Federal Pell Grants in an Award 

Year: The Department proposed that a 

student would be eligible to receive 

payment from a second Scheduled 

Award if the student was also 

completing the hours of the first 

academic year in that payment period. 

In conjunction with this provision, the 

Department proposed to require 

recalculation of a student’s payment for 

any payment period in which the 

student is receiving a second Scheduled 

Award if the projected enrollment status 

of a student enrolled in a term-based 

program changed. This recalculation 

requirement would ensure that a 

student who is not accelerating does not 

receive the benefit of a payment from a 

second Scheduled Award. Non-Federal 

negotiators objected to the recalculation 

requirements, citing concern that they 

would be administratively burdensome 

and create a different treatment 

compared to recalculations for first 

Scheduled Awards. As discussed 

extensively above in the Reasons 

section related to this provision, the 

Department rejected a number of 

alternatives proposed by non-Federal 

negotiators, because they failed to 

encourage a student to accelerate the 

completion of his or her program of 

study within a shorter time period than 

the regularly scheduled completion 

time, i.e., the published length of the 

program. Consensus was not reached on 

this issue. 

Maximum Federal Pell Grant for 

Children of Soldiers: During the 

negotiation of these proposed 

regulations, the Department proposed 

that a student must have an EFC in the 

numerical range that would make a 

student eligible for a Federal Pell Grant 

to qualify for a zero EFC under this 

provision. Non-Federal negotiators 

objected that this added an additional 

student eligibility requirement not 


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42418 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

provided for in the statute. Based on 

this objection and the Department’s 

belief that any student with a parent or 

guardian who died in Iraq or 

Afghanistan after September 11, 2001 

should receive a zero EFC, the 

Department agreed with the non-Federal 

negotiators’ proposed language although 

the Department’s alternative would have 

cost approximately $450,000 less over 

five years than the proposed regulations 

that drew consensus. 

Non-Federal negotiators also 

suggested that recipients should receive 

a Maximum Pell Award instead of a 

zero EFC. The Department declined on 

the basis that it conflicted with the 

explicit language of the statute. 

TEACH Grant Program Periods of 

Suspension and Discharge of Agreement 

to Serve: Several non-Federal 

negotiators suggested that the 

Department should expand the 

categories of extenuating circumstances 

under which a TEACH Grant recipient 

who is unable to fulfill all or a portion 

of his or her teaching service obligation 

may be excused from fulfilling that 

portion of the teaching service 

obligation to include economic 

hardship, noting that teachers were 

being laid off in a number of areas and 

TEACH Grant recipients might not be 

able to find full-time employment in 

their high-need fields due to the current 

economic conditions. The Department 

rejected this alternative, believing that 

the eight-year timeframe to complete the 

four-year service requirement is 

sufficient to overcome temporary 

hardship in locating a suitable position. 

Benefits 

Benefits provided in these proposed 

regulations include greater transparency 

for prospective and enrolled students at 

institutions participating in the Federal 

Student Financial Assistance programs; 

increased eligibility for certain 

recipients of Federal Student Financial 

Assistance program funds; established 

requirements under which 

servicemembers are readmitted to 

participating institutions; established 

extenuating circumstances under which 

a TEACH Grant recipient may be 

excused from fulfilling all or part of his 

or her service obligation; expanded use 

of FWS funds to permit institutions to 

compensate students employed in 

projects that teach civics in school, raise 

awareness of government functions or 

resources, or increase civic 

participation; allowing institutions 

located in major disaster areas to make 

FWS payments to disaster-affected 

students; new requirements for 

determining how proprietary 

institutions calculate the amount and 

percent of revenue derived from sources 

other than title IV, HEA program funds; 

providing that an institution that 

conducts a teach-out at a site of a closed 

institution may, under certain 

conditions, establish that site as an 

additional location; amending the 

definition of ‘‘proprietary institution of 

higher education’’ to include 

institutions that provide a program 

leading to a baccalaureate degree in 

liberal arts, if the institution provided 

that program since January 1, 2009, and 

has been accredited by a regional 

accrediting agency since October 1, 

2007, or earlier; providing that the nonFederal share of LEAP Grants no longer 

has to come from a direct appropriation 

of State funds; increased information to 

LEAP Grant recipients and recipients of 

the new GAP program; and the 

establishment of the activities, awards, 

allotments to States, matching funds 

requirements, consumer information 

requirements, application requirements, 

and other requirements needed to begin 

and continue participating in the GAP 

Program. In most cases, the Department 

lacks data to accurately assess the 

impact of these benefits. The 

Department is interested in receiving 

comments or data that would support a 

more rigorous analysis of the impact of 

these provisions. 

These benefits all flow directly from 

statutory changes included in the 

HEOA; they are not materially affected 

by discretionary choices exercised by 

the Department in developing these 

regulations. As discussed in greater 

detail under Net Budget Impacts, these 

proposed provisions result in net costs 

to the government of $1,644 million 

over 2010–2014. 

Costs 

Many of the statutory provisions 

implemented though this NPRM will 

require regulated entities to develop 

new disclosures and other materials, as 

well as accompanying dissemination 

processes. Other proposed regulations 

generally would require discrete 

changes in specific parameters 

associated with existing guidance—such 

as changes to FWS cash management 

practices and TEACH Grant service 

suspension and discharge benefits. 

Entities wishing to continue to 

participate in the student aid programs 

have already absorbed most of the 

administrative costs related to 

implementing these proposed 

regulations. Marginal costs over this 

baseline are primarily related to onetime system changes that, while 

possibly significant in some cases, are 

an unavoidable cost of continued 

program participation. In assessing the 

potential impact of these proposed 

regulations, the Department recognizes 

that certain provisions—such as the 

requirement for additional disclosures— 

are likely to increase workload for some 

program participants. This additional 

workload is discussed in more detail 

under the Paperwork Reduction Act of 

1995 section of this preamble. 

Additional workload would normally be 

expected to result in estimated costs 

associated with either the hiring of 

additional employees or opportunity 

costs related to the reassignment of 

existing staff from other activities. Given 

the limited data available, the 

Department is particularly interested in 

comments and supporting information 

related to possible burden stemming 

from the proposed regulations. 

Estimates included in this notice will be 

reevaluated based on any information 

received during the public comment 

period. 

Federal Pell Grant Program: 

Statutory changes implemented by 

these proposed regulations are 

estimated to increase grant awards 

under the Federal Pell Grant Program by 

$297 million over award year 2009– 

2010 and a total of $1,643 million over 

five years. This will increase Federal 

costs by the same amount. 

Statutory changes implemented by 

these proposed regulations to grant 

children of deceased soldiers a zero EFC 

are estimated to increase grant awards 

under the Federal Pell Grant Program by 

approximately $280,000 over award 

year 2009–2010 and a total of $500,000 

over five years. This will increase 

Federal costs by the same amount. 

Because institutions of higher 

education affected by these regulations 

already participate in the Federal Pell 

Grant Program, these schools have 

already established systems and 

procedures to meet program eligibility 

requirements. Accordingly, entities 

wishing to continue to participate in the 

program have already absorbed most of 

the administrative costs related to 

implementing these regulations. 

Marginal costs over this baseline are 

primarily related to one-time system 

changes that, while possibly significant 

in some cases, are an unavoidable cost 

of continued program participation. 

Net Budget Impacts 

HEOA provisions implemented by 

these proposed regulations are 

estimated to have a net budget impact 

of $297.4 million in 2010 and $1.6 

billion over FY 2011–2013. Absent 

evidence on the impact of these 

regulations on student behavior, budget 

cost estimates were based on behavior 

as reflected in various Department data 


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sets and longitudinal surveys listed 

under Assumptions, Limitations, and 

Data Sources in this preamble. The 

budgetary impact of the proposed 

regulations is almost entirely driven by 

statutory changes involving the 

provision of two Pell Grants in one year. 

Assumptions, Limitations, and Data 

Sources 

Because these proposed regulations 

would largely restate statutory 

requirements that would be selfimplementing in the absence of 

regulatory action, impact estimates 

provided in the preceding section reflect 

a pre-statutory baseline in which the 

HEOA changes implemented in these 

proposed regulations do not exist. Costs 

have been quantified for five years. In 

general, these estimates should be 

considered preliminary; they will be 

reevaluated in light of any comments or 

information received by the Department 

prior to the publication of the final 

regulations. The final regulations will 

incorporate this information in a revised 

analysis. 

In developing these estimates, a wide 

range of data sources were used, 

including data from the National 

Student Loan Data System; operational 

and financial data from Department of 

Education systems; and data from a 

range of surveys conducted by the 

National Center for Education Statistics 

such as the 2004 National 

Postsecondary Student Aid Survey, the 

1994 National Education Longitudinal 

Study, and the 1996 Beginning 

Postsecondary Student Survey. For the 

regulations related to the Federal Pell 

Grant Program, the sample file used for 

the Pell Grant estimation model is 

created from a representative portion of 

FAFSA applicants merged to Pell 

recipient data from the most current 

completed academic year (currently AY 

2007–08). The sample data is ‘‘aged’’ 

using OMB economic assumptions and 

applicant growth assumptions to project 

future awards. Data from other sources, 

such as the Census Bureau, were also 

used. Data on administrative burden at 

participating schools and third-party 

servicers are extremely limited; 

accordingly, as noted above, the 

Department is particularly interested in 

comments in this area. 

Elsewhere in this SUPPLEMENTARY

INFORMATION section we identify and 

explain burdens specifically associated 

with information collection 

requirements. See the heading 

Paperwork Reduction Act of 1995. 

Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.Whitehouse.gov/omb/Circulars/ 

a004/a-4.pdf), in Table 1, we have 

prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of these proposed 

regulations. This table provides our best 

estimate of the changes in Federal 

student aid payments as a result of these 

proposed regulations. Expenditures are 

classified as transfers from the Federal 

government to student loan borrowers 

(for expanded loan discharges, teacher 

loan forgiveness payments). 

TABLE 1—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES (IN MILLIONS) 

Category Transfers 

Annualized Monetized 

Transfers.

$297.4 million in 

2010. 

From Whom To 

Whom? 

Federal Government 

To Student Loan 

Borrowers. 

Clarity of the Regulations 

Executive Order 12866 and the 

Presidential memorandum ‘‘Plain 

Language in Government Writing’’ 

requires each agency to write 

regulations that are easy to understand. 

The Secretary invites comments on 

how to make these proposed regulations 

easier to understand, including answers 

to questions such as the following: 

• Are the requirements in the 

proposed regulations clearly stated? 

• Do the proposed regulations contain 

technical terms or other wording that 

interferes with their clarity? 

• Does the format of the proposed 

regulations (grouping and order of 

sections, use of headings, paragraphing, 

etc.) aid or reduce their clarity? 

• Would the proposed regulations be 

easier to understand if we divided them 

into more (but shorter) sections? (A 

‘‘section’’ is preceded by the symbol 

‘‘§ ’’ and a numbered heading; for 

example, § 682.209 Repayment of a 

loan.) 

• Could the description of the 

proposed regulations in the 

‘‘Supplementary Information’’ section of 

this preamble be more helpful in 

making the proposed regulations easier 

to understand? If so, how? 

• What else could we do to make the 

proposed regulations easier to 

understand? 

To send any comments that concern 

how the Department could make these 

proposed regulations easier to 

understand, see the instructions in the 

ADDRESSES section of this preamble. 

Regulatory Flexibility Act Certification 

The Secretary certifies that these 

proposed regulations would not have a 

significant economic impact on a 

substantial number of small entities. 

These proposed regulations would affect 

institutions of higher education that 

participate in Title IV, HEA programs 

and individual students and parents. 

The U.S. Small Business Administration 

Size Standards define institutions and 

lenders as ‘‘small entities’’ if they are 

for-profit or nonprofit institutions with 

total annual revenue below $5,000,000 

or if they are institutions controlled by 

governmental entities with populations 

below 50,000. A significant percentage 

of the institutions participating in the 

Federal student loan programs meet the 

definition of ‘‘small entities.’’ For these 

institutions, the new requirements 

imposed under the proposed regulations 

are not expected to impose significant 

new costs. The impact of the proposed 

regulations on individuals is not subject 

to the Regulatory Flexibility Act. 

The Secretary invites comments from 

small institutions and lenders as to 

whether they believe the proposed 

changes would have a significant 

economic impact on them and, if so, 

requests evidence to support that belief. 

Paperwork Reduction Act of 1995 

Proposed §§ 668.14, 668.18, 668.23, 

668.28, 668.41, 668.43, 668.45, 668.46, 

668.49, 668.232, 668.233, 686.41, 

686.42, 690.63, 690.64, 690.67, 690.75, 

692.21, and 692.100, 692.101, 692.111 

contain information collection 

requirements. Under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)), the Department of Education 

has submitted a copy of these sections 

to the Office of Management and Budget 

(OMB) for its review. 

Section 600.5(a)(5)—Definition of 

Baccalaureate Liberal Arts Programs 

Offered by Proprietary Institutions 

The proposed change to § 600.5(a)(5) 

would add to the definition of 

proprietary institution of higher 

education, an institution that provides a 

program leading to a baccalaureate 

degree in liberal arts that the institution 

has provided since January 1, 2009, so 

long as the institution has been 

accredited by a recognized regional 

accreditation agency or organization 

since October 1, 2007, or earlier. This 

proposed change in the definition of a 

proprietary institution does not impact 

burden. 

While the current regulations point to 

OMB 1840–0098, we estimate that there 

is no change in burden associated with 

this section of the regulations as 


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reported under the redesignated OMB 

Control Number 1845–0012. 

Section 668.14(b)(31)—Institutional 

Requirements for Teach-Outs/Eligibility 

and Certification Procedures 

The proposed regulations in 

§ 668.14(b)(31) are amended to require 

an institution to submit a teach-out plan 

to its accrediting agency whenever (1) 

the Department or their accrediting 

agency initiates an LS&T, or an 

emergency action against the institution, 

as required by statute; (2) the 

institution’s State licensing or 

authorizing agency revokes the 

institution’s license or legal 

authorization to provide an educational 

program; (3) the institution intends to 

close a location that provides 100 

percent of at least one program; or (4) 

the institution otherwise intends to 

cease operations. 

While the current regulations in 

§ 668.14 point to OMB 1840–0537, we 

estimate that the proposed changes in 

§ 668.14 will increase burden by 160 

hours for institutions under the 

redesignated OMB Control Number 

1845–0022. 

Section 668.18—Readmission 

Requirements for Servicemembers 

The proposed § 668.18 of the 

regulations include the general 

requirements that an institution may not 

deny readmission to a servicemember, 

but must readmit the servicemember 

with the same academic status as when 

the student was last admitted to the 

institution. The proposed regulations 

clarify that the requirements also apply 

to a student who was admitted to an 

institution, but did not begin attendance 

because of service in the uniformed 

services. The proposed regulations 

specify that the institution must 

promptly readmit a student, and would 

define ‘‘promptly readmit’’ as 

readmitting a student into the next class 

or classes in the student’s program 

unless the student requests a later date 

of admission, or unusual circumstances 

require the institution to admit the 

student at a later date. The proposed 

regulations require the institution to 

make reasonable efforts to help the 

student become prepared or to enable 

the student to complete the program 

including, but not limited to, providing 

refresher courses at no extra cost and 

allowing the student to retake a pretest 

at no extra cost. The institution would 

not be required to readmit the student 

if, after reasonable efforts by the 

institution, the student is still not 

prepared to resume the program at the 

point where he or she left off, or is still 

unable to complete the program. 

The proposed regulation requires an 

institution to designate one or more 

offices for the purpose of receiving 

advance notice from students of their 

absence from the institution 

necessitated by service in the uniformed 

services, and notice from students of 

intent to return to the institution. 

However, such notice would not need to 

follow any particular format, nor would 

a student have to indicate if the student 

intends to return to the institution. Also, 

any such notice may be provided by an 

appropriate officer of the Armed Forces. 

The notice of intent to return may be 

provided orally or in writing and would 

not need to follow any particular format. 

A period of absence from the institution 

before or after performing service in the 

uniformed services would not count 

against the period of uniformed service 

which is limited to the five years. 

The proposed regulations list the 

documentation that support the 

institution’s determination for 

readmission that a student must submit 

with an application for readmission. 

The proposed regulations make clear 

that the types of documentation 

available or necessary will vary from 

case to case. 

The proposed regulations list the 

circumstances that a student’s eligibility 

for readmission to an institution would 

be terminated. 

We estimate that the proposed 

changes will increase burden for 

students by 384 hours and for 

institutions by 1,129 hours for a total 

increase in burden of 1,513 hours in 

OMB Control Number 1845–NEW1. 

Non-Title IV Revenue Requirement (90/ 

10) 

Section 668.28(a)—Calculating the 

Revenue Percentage 

The proposed regulations in 

§ 668.28(a) implement the statutory 

provisions relating to counting revenue 

from non-title IV eligible programs. 

Regarding institutional loans for 

which a net present value (NPV) would 

be calculated, the proposed regulations 

establish that institutional loans would 

have to be credited in-full to the 

students’ accounts, be evidenced by 

standalone repayment agreements 

between students and the institution, 

and be separate from enrollment 

contracts signed by students. 

To count revenue from loan funds in 

excess of the loan limits in effect prior 

to ECASLA in the allowable revenue 

category, the proposed regulations allow 

institutions to count the excess amount 

on a payment-period basis. 

We estimate that the proposed 

regulations will increase burden for 

institutions; however, these proposed 

regulations only define non-title IV 

revenue. The burden increase is found 

in § 668.28(b) and (c) under OMB 1845– 

NEW2. 

Section 668.28(b)—Net Present Value 

The proposed regulation 668.28(b) 

defines the NPV as the sum of the 

discounted cash flows. Proposed 

Appendix C illustrates how an 

institution calculates its 90/10 revenue 

percentage. 

The proposed regulations allow a 

simpler alternative to performing the 

NPV calculation, by allowing an 

institution to use 50 percent of the total 

amount of loans it made during the 

fiscal year as the NPV. However, as a 

condition of using the 50 percent 

alternative calculation, if the institution 

chooses to use this alternative, it may 

not sell any of the associated loans until 

they have been in repayment for at least 

two years. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 3,087 hours in the new 

OMB Control Number 1845–NEW2. 

Section 668.28(c)—Non-title IV Revenue 

(90/10) 

The proposed regulations in 

§ 668.28(c) would remove all of the 90/ 

10 provisions from 34 CFR 600.5 and 

relocate the amended provisions to 

subpart B of part 668. The proposed 

regulations amend the program 

participation agreement to specify that a 

proprietary institution must derive at 

least 10 percent of its revenue from 

sources other than title IV, HEA 

program funds. If an institution does not 

satisfy the 90/10 requirement, the 

proposed regulations require the 

institution to notify the Department no 

later than 45 days after the end of its 

fiscal year that it failed the 90/10 

requirement. In keeping with 

provisional certification requirements 

the current regulations are amended by 

adding proposed language to provide 

that a proprietary institution’s 

certification automatically becomes 

provisional if it fails the 90/10 

requirement for any fiscal year. 

We estimate that the proposed 

regulations in § 668.28(c) will increase 

burden for institutions by 1 hour in the 

new OMB Control Number 1845–NEW2. 

Section 668.23(d)(4)—Audited Financial 

Statements 

The proposed regulations in 

§ 668.23(d)(4) require that a proprietary 

institution must disclose in a footnote to 

its financial statement audit the 

percentage of its revenues derived from 

the title IV, HEA program funds that the 


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institution received during the fiscal 

year covered by that audit. The 

institution must also report in the 

footnote the non-Federal and Federal 

revenue by source that was included in 

the 90/10 calculation. 

While the current regulations point to 

OMB Control Number 1840–0697, we 

estimate that the proposed regulations 

in § 668.23(d)(4) will increase burden 

for institutions by 165 hours for the 

redesignated OMB Control Number 

1845–0038. 

Section 668.43(a)(5)(iv)—Institutional 

Plans for Improving the Academic 

Program 

The proposed regulation in 

§ 668.43(a) amends the information 

about the academic program that the 

institution must make readily available 

to enrolled and prospective students 

about any plans by the institution for 

improving any academic program at the 

institution. An institution would be 

allowed to determine what a ‘‘plan’’ is, 

including when a plan becomes a plan. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 968 hours in OMB 

Control Number 1845–0022. 

Sections 668.14(b) and 668.43(a)—Peerto-Peer File Sharing/Copyrighted 

Material 

Section 668.14(b)(30)—Program 

Participation Agreement (PPA) 

The proposed regulations require an 

institution, as a condition of 

participation in a title IV, HEA program, 

to agree that it has developed and 

implemented plans to effectively 

combat the unauthorized distribution of 

copyrighted material by users of the 

institution’s network without unduly 

interfering with the educational and 

research use of the network. 

An institution’s plan must include: 

The use of one or more technologybased deterrents; 

Mechanisms for educating and 

informing its community about 

appropriate versus inappropriate use of 

copyrighted material; 

Procedures for handling unauthorized 

distribution of copyrighted material, 

including disciplinary procedures; and 

Procedures for periodically reviewing 

the effectiveness of the plans. 

The proposed regulations make clear 

that no particular technology measures 

are favored or required for inclusion in 

an institution’s plans, and each 

institution retains the authority to 

determine what its particular plans for 

compliance will be, including those that 

prohibit content monitoring. 

The proposed regulation requires an 

institution, in consultation with the 

chief technology officer or other 

designated officer of the institution, to 

the extent practicable, offer legal 

alternatives to illegal downloading or 

otherwise acquiring copyrighted 

material, as determined by the 

institution. The proposed regulations 

would also require that institutions (1) 

periodically review the legal 

alternatives for downloading or 

otherwise acquiring copyrighted 

material and (2) make the results of the 

review available to their students 

through a Web site and/or other means. 

While the current regulations in 

§ 668.14 point to OMB 1840–0537, we 

estimate that the proposed changes in 

§ 668.14(b)(30) will increase burden by 

91,120 hours for institutions under the 

redesignated OMB Control Number 

1845–0022. 

Section 668.43(a)(10)—Consumer 

Information 

The proposed regulations requires 

information regarding institutional 

policies and sanctions related to the 

unauthorized distribution of 

copyrighted material be included in the 

list of institutional information 

provided upon request to prospective 

and enrolled students. This information 

must (1) explicitly inform enrolled and 

prospective students that unauthorized 

distribution of copyrighted material, 

including peer-to-peer file sharing, may 

subject a student to civil and criminal 

liabilities; (2) include a summary of the 

penalties for violation of Federal 

copyright laws; and (3) delineate the 

institution’s policies with respect to 

unauthorized peer-to-peer file sharing, 

including disciplinary actions that are 

taken against students who engage in 

illegal downloading or unauthorized 

distribution of copyrighted materials 

using the institution’s information 

technology system. 

We estimate that the proposed 

regulations in § 668.43(a)(10) will 

increase burden for institutions by 1,424 

hours in OMB Control Number 1845– 

0022. 

Section 668.41—Reporting and 

Disclosure of Information 

The proposed regulations in § 668.41 

add retention rate information, 

placement rate information, and 

information on the types of graduate 

and professional education in which 

graduates of the institution’s four-year 

degree programs enroll, to the types of 

information that an institution must 

provide to its enrolled and prospective 

students. When reporting its retention 

rate, an institution must disclose the 

institution’s retention rate as defined by 

and reported to the Integrated 

Postsecondary Education Data System 

(IPEDS). The institution may use 

various sources of retention rate 

information and information on types of 

graduate and professional education in 

which graduates of the institution’s 

four-year degree programs enroll (such 

as State data systems, surveys, or other 

relevant sources). If an actual placement 

rate is calculated by the institution, it 

must be disclosed. The institution 

would have to identify the source of the 

information it discloses, as well as the 

time frames and methodology associated 

with that information. 

While the current regulations point to 

both OMB 1845–0004 and OMB 1845– 

0010, OMB 1845–0010 has been 

recently discontinued, therefore, we 

estimate that the proposed regulations 

will increase burden for institutions 

8,541 hours in OMB Control Number 

1845–0004. 

Section 668.45—Information on 

Completion or Graduation Rates 

Under the proposed regulations in 

§ 668.45, an institution’s completion 

and graduation rate information must be 

disaggregated by gender, by each major 

racial and ethnic subgroup, and by 

whether or not the institution’s students 

received certain types of Federal student 

aid. The disaggregation by receipt of aid 

is categorized by: 

Recipients of a Federal Pell Grant; 

Recipients of a Federal Family 

Education Loan or a Federal Direct Loan 

(other than an Unsubsidized Stafford 

Loan); and 

Recipients of neither a Federal Pell 

Grant nor a Federal Family Education 

Loan or a Federal Direct Loan (other 

than an Unsubsidized Stafford loan). 

The institution would report its 

completion and graduation rate 

information in a disaggregated fashion 

only if the number of students in each 

category is sufficient to yield 

statistically reliable information, and 

doing so would not reveal personally 

identifiable information about an 

individual student. 

We estimate that the proposed 

regulations will increase burden for 

institutions 7,488 hours in OMB Control 

Number 1845–0004. 

Campus Safety Provisions 

Section 668.46(c)(3)—Hate Crime 

Reporting 

The proposed regulations add the 

crimes of ‘‘larceny-theft,’’ ‘‘simple 

assault,’’ ‘‘intimidation,’’ and 

‘‘destruction/damage/vandalism of 

property’’ to the crimes that must be 

reported in hate crime statistics. 

Additionally, the proposed regulations 


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update the definitions of the terms 

‘‘Weapons: carrying, possessing, etc.,’’ 

‘‘Drug abuse violations,’’ and ‘‘Liquor 

law violations’’ which are excerpted 

from the Federal Bureau of 

Investigation’s Uniform Crime Reporting 

Program, to reflect changes made by the 

FBI to these definitions in 2004. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 5,695 hours in OMB 

Control Number 1845–0022. 

Reporting Emergency Response and 

Evacuation Procedures 

Section 668.46(e)—Timely Warning and 

Emergency Notification 

The proposed regulations clarify the 

difference between the existing timely 

warning requirement and the new 

requirement for an emergency 

notification policy. While a timely 

warning must be issued in response to 

specific crimes, an emergency 

notification is required in the case of an 

immediate threat to the health or safety 

of students or employees occurring on 

campus. The proposed language would 

clarify that an institution that follows its 

emergency notification procedures is 

not required to issue a timely warning 

based on the same circumstances; 

however, the institution must provide 

adequate follow-up information to the 

community as needed. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 1,424 hours in OMB 

Control Number 1845–0022. 

Section 668.46(g)—Emergency Response 

and Evacuation Procedures 

The proposed regulations outline the 

elements that an institution must 

include in its statement of policy 

describing its emergency response and 

evacuating procedures in its annual 

security report to include the following: 

Procedures to immediately notify the 

campus community upon the 

confirmation of a significant emergency 

or dangerous situation involving an 

immediate threat occurring on the 

campus. 

A description of the process that (1) 

confirms that there is a significant 

emergency or dangerous situation, (2) 

determines the appropriate segment or 

segments of the campus community to 

receive a notification, (3) determines the 

content of the notification, and (4) 

initiates the notification system. 

A statement that the institution will, 

without delay, and taking into account 

the safety of the community, determine 

the content of the notification and 

initiate the notification system, unless 

issuing the notification will, in the 

professional judgment of responsible 

authorities, compromise efforts to assist 

a victim or to contain, respond to, or 

otherwise mitigate the emergency. 

A list of the titles of the persons or 

organizations responsible for carrying 

out the actions proposed. 

Procedures for disseminating 

emergency information to the larger 

community. 

Procedures for testing its emergency 

response and evacuation procedures on 

at least an annual basis with at least one 

test per calendar year, and be 

documented, including a description of 

the exercise, the date, time, and if it was 

announced or unannounced. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 11,390 hours in OMB 

Control Number 1845–0022. 

Missing Student Procedure 

Section 668.41(a)—Definition of OnCampus Student Housing Facility 

The proposed regulations in 

§ 668.41(a) would add a definition of the 

term on-campus student housing facility 

to mean a dormitory or other residential 

facility for students that is located on an 

institution’s campus. 

The proposed definition would be 

added to clarify what is meant by oncampus student housing facility and to 

link the meaning of ‘‘on-campus’’ to the 

existing regulatory definition of campus 

in § 668.46(a), which is used for crime 

reporting under § 668.46(c). The 

proposed change is to a definition and 

does not impact burden. 

While the current regulations point to 

both OMB 1845–0004 and OMB 1845– 

0010, OMB 1845–0010 has recently 

been discontinued. We estimate that 

there is no change in burden associated 

with this section of the regulations as 

reported under OMB Control Number 

1845–0004. 

Section 668.46(b)—Annual Security 

Report 

The proposed regulations in 

§ 668.46(b) require an institution to 

include its missing student notification 

policy and procedures in its annual 

security report. This would be required 

beginning with the annual security 

report distributed by October 1, 2010. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 456 hours for an increase 

in burden in OMB Control Number 

1845–0022. 

Section 668.46(h)—Missing Student 

Notification Policy 

The proposed regulation in 

§ 668.46(h) implements the new 

statutory requirements, specifying that a 

statement of policy regarding missing 

student notification for students 

residing in on-campus student housing 

facilities must include: 

A list of the titles of the persons or 

organizations to which students, 

employees, or other individuals should 

report that a student has been missing 

for 24 hours; 

A requirement that any official 

missing student report be immediately 

referred to the institution’s police or 

campus security department or, if not 

applicable, to the local law enforcement 

agency with jurisdiction in the area; 

The option for each student to 

identify a contact person to be notified 

if the student is determined missing by 

the institutional police or campus 

security department, or the local law 

enforcement agency; and 

A disclosure that contact information 

will be registered and maintained 

confidentially. 

The proposed regulation further 

requires an institution to advise 

students who are under 18 and not 

emancipated that if the student is 

missing it will notify a custodial parent 

or guardian in addition to any contact 

person designated by the student. All 

students must also be advised that, 

regardless of whether they name a 

contact person, the institution must 

notify the local law enforcement agency 

that the student is missing, unless the 

local law enforcement was the entity 

that determined that the student is 

missing. 

The proposed regulations reflect the 

new statutory requirements. These 

regulations do not preclude the 

institution from contacting the student’s 

contact person or the parent 

immediately upon determination that 

the student has been missing for 24 

hours. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 2,423 hours for an 

increase in burden in OMB Control 

Number 1845–0022. 

Fire Safety Standards 

Section 668.41(e)—Annual Fire Safety 

Report 

The proposed regulations provide that 

institutions that maintain an on-campus 

student housing facility must distribute 

an annual fire safety report and to create 

publication requirements for the annual 

fire safety report that are similar to the 

long-standing rules for the annual 

security report. 

The proposed regulations allow an 

institution to publish the annual 

security report and the annual fire safety 


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report together, as long as the title of the 

document clearly states that it contains 

both the annual security report and the 

annual fire safety report. If an 

institution chooses to publish the 

reports separately, it would have to 

include information in each of the two 

reports about how to directly access the 

other report. 

While the current regulations point to 

both OMB 1845–0004 and OMB 1845– 

0010, OMB 1845–0010 has recently 

been discontinued. The burden 

associated with the data collection and 

reporting for the annual fire safety 

report is reflected in § 668.49 as 

reported under OMB Control Number 

1845–NEW3. 

Section 668.49—Annual Fire Safety 

Report 

The proposed regulations define the 

following terms relevant to the fire 

safety reporting requirements: Cause of 

fire; Fire; Fire drill; Fire-related injury; 

Fire-related death; Fire-safety system; 

and Value of property damage. 

The proposed regulation requires an 

institution to report to the public, the 

statistics that it submits to the 

Department in its annual fire safety 

report. The institution would have to 

provide data for the three most recent 

calendar years for which data are 

available. The first full report to contain 

the full three years of data would be the 

report due on October 1, 2012. 

The proposed regulations outline the 

elements that an institution must 

disclose in its annual fire safety report, 

including: Fire statistics; A description 

of each on-campus student housing 

facility fire safety system; The number 

of regular, mandatory, supervised fire 

drills held during the previous calendar 

year; Policies or rules on portable 

electrical appliances, smoking, and 

open flames in student housing 

facilities; Procedures for student 

housing evacuation in the case of a fire; 

Policies on fire safety education and 

training programs provided to students, 

faculty, and staff; A list of the titles of 

each person or organization to which 

students and employees should report 

that a fire has occurred; and Plans for 

future improvements in fire safety. 

The proposed regulations specify that 

an institution that maintains an oncampus student housing facility must 

maintain a written and easily 

understood fire log that records, by the 

date that the fire was reported (as 

opposed to by the date that the fire 

occurred), any fire that occurred in an 

on-campus student housing facility. The 

log would have to include the nature, 

date, time, and general location of each 

fire, and require that the log be available 

for public. These proposed regulations 

also implement the statutory 

requirement that an institution make an 

annual report to the campus community 

on the fires recorded in the fire log; 

however, this requirement may be 

satisfied by the annual fire safety report 

described in proposed § 668.49(b). 

We estimate that the proposed 

regulations will increase burden for 

institutions by 7,283 hours in OMB 

Control Number 1845–NEW3. 

Financial Assistance for Students With 

Intellectual Disabilities 

Section 600.5—Proprietary Institution of 

Higher Education 

The proposed regulation in 

§ 600.5(a)(5)(i)(B)(2)(ii) defines a 

proprietary institution of higher 

education as one that may have a 

comprehensive transition and 

postsecondary program as an eligible 

program when it is approved by the 

Secretary. The proposed change in the 

definition of an eligible program does 

not impact burden. 

While the current regulations in 

§ 600.5 point to OMB 1840–0098, this 

information collection has been 

discontinued and redesignated to 1845– 

0012. We estimate that there is no 

change in burden associated with this 

proposed change in the regulations. 

Section 668.8—Eligible Program 

The proposed regulation in § 668.8(n) 

defines a comprehensive transition and 

postsecondary program as an eligible 

program when it is approved by the 

Secretary. The proposed change in the 

definition of an eligible program does 

not impact burden. 

While the current regulations in 

§ 668.8 point to OMB 1845–0537, this 

collection package has been 

discontinued; we estimate that there is 

no change in burden associated with 

this proposed change in the regulations. 

Section 668.232—Program Eligibility 

The proposed regulations require an 

institution that wishes to provide a 

comprehensive transition and 

postsecondary program to apply and 

receive approval from the Secretary. The 

proposed regulations outline the 

elements that an institution must 

include in its application, including: A 

detailed description of the 

comprehensive transition and 

postsecondary program; The policy for 

determining whether a student enrolled 

in the program is making satisfactory 

academic progress; A statement of the 

number of weeks of instructional time 

and the number of semester or quarter 

credit hours or clock hours in the 

program; A description of the 

educational credential offered or 

identified outcome or outcomes 

established by the institution for all 

students enrolled in the program; A 

copy of the letter or notice sent to the 

institution’s accrediting agency 

informing the agency of its 

comprehensive transition and 

postsecondary program; and Any other 

information the Department may 

require. We estimate that the proposed 

regulations will increase burden for 

institutions by 66 hours in OMB Control 

Number 1845–NEW4. 

Section 668.233—Student Eligibility 

The proposed regulations in § 668.233 

provide that a student with intellectual 

disabilities enrolled in a comprehensive 

transition and postsecondary program 

may be eligible for title IV, HEA 

program assistance under the Federal 

Pell grant, FSEOG, and FWS programs 

if: The student is making satisfactory 

academic program in accordance with 

the institution’s published standards for 

students enrolled in the comprehensive 

transition and postsecondary program; 

and The institution obtains a record 

from a local educational agency that the 

student is or was eligible for FAPE 

under IDEA. If the FAPE record does not 

indicate that the student has an 

intellectual disability, the institution 

would have to obtain documentation 

from another source that identifies the 

intellectual disability. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 768 hours in OMB 

Control Number 1845–NEW4. 

Section 668.43(a)(7)—Institutional 

Information 

The proposed regulation changes the 

phrase ‘‘any special facilities and 

services’’ to ‘‘the services and facilities,’’ 

and replaces the phrase ‘‘disabled 

students’’ with ‘‘students with 

disabilities.’’ The proposed changes 

would also clarify that a description of 

services and facilities for students with 

disabilities must also contain the 

services and facilities available for 

students with intellectual disabilities. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 44 hours in OMB Control 

Number 1845–0022. 

Federal Work Study Programs 

Section 675.16—Conforming FWS 

Payment Requirements to the Cash 

Management Regulations 

The proposed regulations in 

§ 675.16(b)(1)(ii) and (b)(2), amend the 

FWS regulations in three ways regarding 


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the use of current award year FWS 

funds to pay prior award year charges. 

First, the amount of prior award year 

charges that could be paid with current 

award year FWS funds would increase 

to not more than $200. Second, the FWS 

provision that allows an institution to 

pay for prior award year charges of $100 

or more would be removed. Finally, we 

clarify that the $200 limit applies to all 

title IV, HEA program funds that an 

institution uses to pay prior-year 

charges. These changes to conform the 

FWS payment requirements to the 

current cash management regulations do 

not impact burden. 

We estimate that there is no change in 

burden associated with this section of 

the regulations under OMB Control 

Number 1845–0019. 

TEACH Grant Program 

Section 686.41—Period of Suspension 

The proposed regulations in § 686.41 

provide that a TEACH Grant recipient 

who is called or ordered to active 

military duty (or his or her 

representative) may request a 

suspension of the eight-year period in 

increments not to exceed three years. 

Once the recipient has exceeded the 3- 

year suspension period, the recipient (or 

his or her representative) may request a 

discharge of all or a portion of his or her 

teaching service obligation. 

We estimate that the proposed 

regulations will increase burden for 

institutions in OMB Control Number 

1845–0083. The Department will submit 

an 83–C incorporating the changes after 

the final regulations have published. 

Section 686.42—Discharge of 

Agreement To Serve 

The proposed regulations in § 686.42 

provide that the recipient may qualify 

for a proportional discharge of his or her 

service obligation based on the number 

of years the recipient has been called or 

ordered to active military duty. 

To obtain the discharge, the recipient 

(or his or her representative) would be 

required to provide the Department: 

A written statement from his or her 

commanding or personnel officer 

certifying that the recipient is on active 

duty status in the Armed Forces, the 

date on which that service began, and 

the date the service is expected to end; 

and a copy of his or her official military 

orders and military identification. 

The Department would notify a 

TEACH Grant recipient of the decision 

reached on his or her request for a 

partial or full discharge of the teaching 

service obligation. The grant recipient 

would be responsible for fulfilling any 

teaching service obligation that is not 

discharged. 

We estimate that the proposed 

regulations will increase burden for 

institutions in OMB Control Number 

1845–0083. The Department will submit 

an 83–C incorporating the changes after 

the final regulations have published. 

Federal Pell Grant Program 

Two Federal Pell Grants in an Award 

Year 

Section 690.67(a)—Student Eligibility 

for a Second Scheduled Award 

The proposed regulations would 

amend § 690.67 to provide that a 

student would be eligible for a second 

Scheduled Award if the student has 

earned in an award year at least the 

credit or clock hours of the first 

academic year of the student’s eligible 

program, and is enrolled as at least a 

half-time student in a program leading 

to a bachelor’s or associate degree or 

other recognized educational credential 

(such as a postsecondary certificate or 

diploma), except as provided for 

students with intellectual disabilities. 

To the extent that the institution will be 

reporting these second scheduled award 

Pell disbursements via the Common 

Origination and Delivery (COD) system, 

there will be some additional burden for 

institutions. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 47,432 hours in OMB 

Control Number 1845–NEW5. 

Section 690.67(b)—Transfer Students 

The proposed regulations in 

§ 690.67(b) would provide that an 

institution determine the credit or clock 

hours that a transfer student has earned 

at a prior institution during the award 

year based on the Federal Pell Grant 

disbursements that the student received 

at the prior institution during the award 

year in relation to the student’s 

Scheduled Award at that prior 

institution. The credit or clock hours 

that the student would be considered to 

have earned would be in the same 

proportion to credit or clock hours in 

the current institution’s academic year 

as the disbursements that the student 

has received at the prior institution in 

the award year are in proportion to the 

student’s Scheduled Award at the prior 

institution. 

To the extent that the institution will 

be reviewing the transfer records of 

these students and subsequently 

reporting second scheduled award Pell 

disbursements via the Common 

Origination and Delivery (COD) system, 

there will be some additional burden for 

institutions. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 14,400 hours in OMB 

Control Number 1845–NEW5. 

Section 690.67(c)—Special 

Circumstances 

The proposed regulations in 

§ 690.67(c) would provide that a 

financial aid administrator may waive 

the requirement that a student complete 

the credit or clock hours in the student’s 

first academic year in the award year 

due to circumstances beyond the 

student’s control. The financial aid 

administrator would be required to 

make and document the determination 

on an individual basis. 

To the extent that the institution will 

be documenting these special 

circumstances and subsequently 

awarding second Pell grants, the 

institutions will be reporting the second 

Pell disbursements via the Common 

Origination and Delivery (COD) system, 

there will be some additional burden for 

institutions. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 3,429 hours in OMB 

Control Number 1845–NEW5. 

Section 690.67(d)—Nonapplicable 

credit or clock hours 

The proposed regulation in 

§ 690.67(d) states that, in determining a 

student’s eligibility for a second 

Scheduled Award in an award year, an 

institution may not use credit or clock 

hours that the student received based on 

Advanced Placement (AP) programs, 

International Baccalaureate (IB) 

programs, testing out, life experience, or 

similar competency measures. 

To the extent that the institution will 

be making determinations about the 

applicability of AP, IB, or other nonapplicable courses, institution will 

subsequently award second Pell grants 

and thereafter report Pell disbursements 

via the Common Origination and 

Delivery (COD) system, thus there will 

be some additional reporting burden for 

institutions. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 2,032 hours in OMB 

Control Number 1845–NEW5. 

Section 690.64—Payment Period in Two 

Award Years 

In this proposed regulation in 

§ 690.64, if a student is enrolled in a 

crossover payment period as a half-time 

or less-than-half-time student, the 

current requirements generally would 

apply. 

If a student is enrolled as a threequarter-time or full-time student, an 

institution must consider the payment 

period to be in the award year in which 


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the student would receive the greater 

payment for the payment period based 

on the information available at the time 

that the student’s Federal Pell Grant is 

initially calculated. If the institution 

subsequently receives information that 

the student would receive a greater 

payment for the payment period by 

reassigning the payment to the other 

award year, the institution would be 

required to reassign the payment to the 

award year providing the greater 

payment. 

A student may request that the 

institution place the payment period in 

the award year that can be expected to 

result in the student receiving a greater 

amount of Federal Pell Grants over the 

two award years in which the payment 

period is scheduled to occur. If the 

student makes that request, the 

institution must assign the payment 

period to that award year. 

To the extent that the institution will 

be reviewing enrollment status in each 

of the two award years and making 

determinations about which award year 

must be used and subsequently 

reporting these second scheduled award 

Pell disbursements via the Common 

Origination and Delivery (COD) system, 

there will be some additional burden for 

institutions. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 33,881 hours in OMB 

Control Number 1845–NEW5. 

Section 690.63(h)—Payment From Two 

Scheduled Awards 

Under the proposed regulations in 

§ 690.63(h), if a student is eligible for 

the remaining portion of a first 

Scheduled Award in an award year and 

for a payment from the second 

Scheduled Award, the student’s 

payment would be calculated using the 

annual award for his or her enrollment 

status for the payment period. The 

student’s payment would be the 

remaining amount of the first Scheduled 

Award being completed plus an amount 

from the second Scheduled Award in 

the award year up to the total amount 

of the payment for the payment period. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 8,471 hours in OMB 

Control Number 1845–NEW5. 

Section 690.75(e)—Maximum Pell Grant 

for Children of Soldiers 

Under the proposed regulation in 

§ 690.75(e), a student whose parent or 

guardian was a member of the Armed 

Forces of the United States and died as 

a result of performing military service in 

Iraq or Afghanistan after September 11, 

2001, would automatically receive a 

zero EFC for purposes of the Federal 

Pell Grant Program if he or she was 

under 24 years old or enrolled in an 

institution of higher education at the 

time of the parent’s or guardian’s death. 

We estimate that the proposed 

regulations will increase burden for 

institutions by 48 hours in OMB Control 

Number 1845–NEW6. 

Part 692 Leveraging Educational 

Assistance Partnership Program 

Section 692.21(k)—Notification to 

Students of LEAP Grant Funding 

Sources 

The proposed regulations require that 

the State program notify eligible 

students that grants under the LEAP 

Grant Program are (1) LEAP Grants and 

(2) are funded by the Federal 

Government, the State, and, where 

applicable, other contributing partners. 

The implementation of the proposed 

regulations for the changes to LEAP and 

the introduction of the GAP program 

will increase burden to States. We 

estimate that the burden in these 

proposed regulations will be associated 

with the application and performance 

report forms under development. These 

forms will be developed after the final 

regulations are published to insure that 

the forms comport with the finalized 

requirements. The new forms will be 

submitted to OMB for approval under 

OMB Control Number 1845–NEW7. 

Section 692.100—Requirements a State 

Must Meet To Receive GAP Funds 

The proposed regulations in § 692.100 

describe the requirements that a State 

must meet to receive an allotment under 

this program including submitting an 

application on behalf of a partnership 

and serving as the primary 

administrative unit of the partnership. 

Under proposed § 692.100(a)(6), a State 

must include in its application the steps 

it plans to take to ensure, to the extent 

practicable, that students who receive a 

LEAP Grant under GAP would persist to 

degree completion. 

Under proposed § 692.100(a)(8) a 

State GAP Program is required to notify 

eligible students that the grants they 

receive under GAP are LEAP Grants and 

that the grants are funded by the Federal 

Government, the State and where 

applicable, other contributing partners. 

The implementation of the proposed 

regulations for the changes to LEAP and 

the introduction of the GAP program 

will increase burden to States. We 

estimate that the burden in these 

proposed regulations will be associated 

with the application and performance 

report forms under development. These 

forms will be developed after the final 

regulations are published to insure that 

the forms comport with the finalized 

requirements. The new forms will be 

submitted to OMB for approval under 

OMB Control Number 1845–NEW7. 

Section 692.101—Requirements That 

Must Be Met by a State Partnership 

The proposed regulations in 

§ 692.101(b)(2) provide that a degreegranting institution of higher education 

that is in a partnership under the GAP 

Program must recruit, admit, and 

provide institutional grant aid to 

participating eligible students as agreed 

to with the State agency. 

The implementation of the proposed 

regulations for the changes to LEAP and 

the introduction of the GAP program 

will increase burden to States. We 

estimate that the burden in these 

proposed regulations will be associated 

with the application and performance 

report forms under development. These 

forms will be developed after the final 

regulations are published to insure that 

the forms comport with the finalized 

requirements. The new forms will be 

submitted to OMB for approval under 

OMB Control Number 1845–NEW7. 

Section 692.111—Purposes for Which a 

State May Use Its GAP Grant 

The proposed regulations in § 692.111 

provide that each State receiving an 

allotment shall annually notify 

potentially eligible students in grades 7 

through 12 in the State, and their 

families, of their potential eligibility for 

student financial assistance, including a 

LEAP Grant under GAP, to attend a 

LEAP-participating institution of higher 

education. 

The notice shall include information 

about early information and 

intervention, mentoring, or outreach 

programs available to the student. The 

notice shall provide a nonbinding 

estimate of the total amount of financial 

aid that an eligible student with a 

similar income level may expect to 

receive, including an estimate of the 

amount of a LEAP Grant under GAP and 

an estimate of the amount of grants, 

loans, and all other available types of 

aid from the major Federal and State 

financial aid programs. The proposed 

notice will also include any additional 

requirements that the State may require 

for receipt of a LEAP Grant under GAP. 

The implementation of the proposed 

regulations for the changes to LEAP and 

the introduction of the GAP program 

will increase burden to States. We 

estimate that the burden in these 

proposed regulations will be associated 

with the application and performance 

report forms under development. These 

forms will be developed after the final 


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42426 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

regulations are published to insure that 

the forms comport with the finalized 

requirements. The new forms will be 

submitted to OMB for approval under 

OMB Control Number 1845–NEW7. 

Consistent with the discussion above, 

the following chart describes the 

sections of the proposed regulations 

involving information collections, the 

information being collected, and the 

collections that the Department will 

submit to the Office of Management and 

Budget for approval and public 

comment under the Paperwork and 

Reduction Act. 

Regulatory section Information section Collection 

668.14(b)(31) ....................................... Providing that an institution that conducts a teachout at a site of a closed institution may, under 

certain conditions, establish that site as an additional location (see sections 487(f) and 498 of 

the HEA). 

OMB 1845–0022. There will be an increase in burden of 160 hours. 

668.18 .................................................. Establishing requirements under which an institution must readmit servicemembers to the same 

academic status they had when they last attended the institution (see section 484C of the 

HEA). 

OMB 1845–NEW1. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. There will be 

an increase in burden of 1,513 hours. 

668.23(d)(4) ......................................... Adds new requirements to include in the audited 

financial statement footnote the non-Federal and 

Federal revenue that was included in the 90/10 

calculation. 

OMB 1845–0038. There will be an increase in burden of 165 hours. 

668.28 .................................................. Establishing new requirements for determining 

how proprietary institutions calculate the amount 

and percent of revenue derived from sources 

other than title IV, HEA program funds (see section 487(d) of the HEA). 

OMB 1845–NEW2. 

There will be a new collection. A separate 60-day 

Federal Register notice will be published to solicit comments. There will be an increase in burden of 3,088 hours. 

668.43(a)(5)(iv) .................................... Expanding the information that an institution must 

make available to prospective and enrolled students to include a description of any plans the 

institution has to improve its academic program 

(see section 485(a) of the HEA). 

OMB 1845–0022. There will be an increase in burden of 968 hours. 

668.14(b)(30), 668.43(a)(10) ................ Providing that an institution must certify that it has 

plans to effectively combat unauthorized distribution of copyrighted material and will offer alternatives to illegal downloading or peer-to-peer 

distribution of intellectual property (see sections 

485(a)(1) and 487(a) of the HEA). 

OMB 1845–0022. There will be an increase in burden of 92,544 hours. 

668.41 .................................................. Expanding the information that institutions must 

make available to prospective and enrolled students to include information on: the employment 

and placement of students, and the retention 

rates of first-time, full-time undergraduate students. 

OMB 1845–0004. There will be an increase in burden of 8,541 hours. 

668.45 .................................................. Expanding the information that institutions must 

make available to prospective students to include completion and graduation rate data that 

is disaggregated by gender, race, and grant or 

loan assistance (see section 485(a) of the 

HEA). 

OMB 1845–0004. There will be an increase in burden of 7,488 hours. 

668.46(c)(3), (e), (g) ............................. Expanding the list of crimes that institutions must 

include in the hate crimes statistics reported to 

the Department. Requiring institutions to include 

in the annual security report a statement of 

emergency response and evacuation procedures (see section 485(f) of the HEA). 

OMB 1845–0022. There will be an increase in burden of 18,509 hours. 

668.41(a) .............................................. Requiring institutions that provide on-campus 

housing facilities to develop and make available 

a missing student notification policy and allow 

students who reside on campus to confidentially 

register contact information (see section 485(j) 

of the HEA). 

OMB 1845–0004. There is no change in burden 

associated with this section of the proposed regulations. 

668.46(b), (h) ....................................... Requiring institutions that provide on-campus 

housing facilities to develop and make available 

a missing student notification policy and allow 

students who reside on campus to confidentially 

register contact information (see section 485(j) 

of the HEA). 

OMB 1845–0022. There will be an increase in burden of 2,879 hours. 

668.41(e) .............................................. Establishing requirements for institutions that 

maintain on-campus housing facilities to publish 

annually a fire safety report, maintain a fire log, 

and report fire statistics to the Department (see 

section 485(i) of the HEA). 

OMB 1845–0004. There is no change in burden 

associated with this section of the proposed regulations. 


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Regulatory section Information section Collection 

668.49 .................................................. Establishing requirements for institutions that 

maintain on-campus housing facilities to publish 

annually a fire safety report, maintain a fire log, 

and report fire statistics to the Department (see 

section 485(i) of the HEA). 

OMB 1845–NEW3. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. There will be 

an increase in burden of 7,283 hours. 

668.232 ................................................ Expanding the eligibility for Federal Pell Grant, 

FWS, and FSEOG Program funds to students 

with intellectual disabilities (see sections 484(s) 

and 760 of the HEA). 

OMB 1845–NEW4. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. There will be 

an increase in burden of 66 hours. 

668.233 ................................................ Expanding the eligibility for Federal Pell Grant, 

FWS, and FSEOG Program funds to students 

with intellectual disabilities (see sections 484(s) 

and 760 of the HEA). 

OMB 1845–NEW4. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. There will be 

an increase in burden of 768 hours. 

688.43(a)(7) ......................................... Requires that institutions report a description of 

services and facilities for students with intellectual disabilities. 

OMB 1845–0022. There will be an increase in burden of 44 hours. 

686.41, 686.42 ..................................... Establishing extenuating circumstances under 

which a TEACH Grant recipient may be excused from fulfilling all or part of his or her service obligation (see section 420N(d)(2) of the 

HEA). 

OMB 1845–0083. Changes will be incorporated 

into the Agreement to Serve form. 

690.67, 690.64, 690.63(h) ................... Establishing requirements under which students 

may receive up to two Federal Pell Grant 

Scheduled Awards during a single award year 

(see section 401(b)(5)(A) of the HEA). 

OMB 1845–NEW5. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. There will be 

an increase in burden of 109,645 hours. 

690.75(e) .............................................. Providing the maximum Federal Pell Grant eligibility to a student whose parent was in the 

armed forces and died in Iraq or Afghanistan if 

the student was under 24 years old or enrolled 

in an institution of higher education at the time 

the parent died (see section 401(F)(4) of the 

HEA). 

OMB 1845–NEW6. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. There will be 

an increase in burden of 48 hours. 

692.21, 692.100, 692.101, 692.111 ..... Requiring the State program to notify students that 

grants are LEAP Grants that are funded by the 

Federal Government, the State, and for LEAP 

Grants to students under the new Grants for Access and Persistence (GAP) Program, other 

contributing partners (see section 415C(b) of the 

HEA). Establishing the activities, awards, allotments to States, matching funds requirements, 

consumer information requirements, application 

requirements, and other requirements needed to 

begin and continue participating in the GAP Program (see sections 415B and 415E of the HEA). 

OMB 1845–NEW7. There will be a new collection. 

A separate 60-day Federal Register notice will 

be published to solicit comments. 

If you want to comment on the 

proposed information collection 

requirements, please send your 

comments to the Office of Information 

and Regulatory Affairs, OMB, Attention: 

Desk Officer for U.S. Department of 

Education. Send these comments by 

e-mail to OIRA_DOCKET@omb.eop.gov 

or by fax to (202) 395–6974. You may 

also send a copy of these comments to 

the Department contact named in the 

ADDRESSES section of this preamble. 

We consider your comments on these 

proposed collections of information in— 

• Deciding whether the proposed 

collections are necessary for the proper 

performance of our functions, including 

whether the information will have 

practical use; 

• Evaluating the accuracy of our 

estimate of the burden of the proposed 

collections, including the validity of our 

methodology and assumptions; 

• Enhancing the quality, usefulness, 

and clarity of the information we 

collect; and 

• Minimizing the burden on those 

who must respond. This includes 

exploring the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology; e.g., permitting electronic 

submission of responses. 

OMB is required to make a decision 

concerning the collections of 

information contained in these 

proposed regulations between 30 and 60 

days after publication of this document 

in the Federal Register. Therefore, to 

ensure that OMB gives your comments 

full consideration, it is important that 

OMB receives the comments within 30 

days of publication. This does not affect 

the deadline for your comments to us on 

the proposed regulations. 

Intergovernmental Review 

These programs are not subject to 

Executive Order 12372 and the 

regulations in 34 CFR part 79. 

Assessment of Educational Impact 

In accordance with section 411 of the 

General Education Provisions Act, 20 

U.S.C. 1221e–4, the Secretary 

particularly requests comments on 

whether these proposed regulations 

would require transmission of 

information that any other agency or 

authority of the United States gathers or 

makes available. 

Electronic Access to This Document 

You may view this document, as well 

as all other Department of Education 

documents published in the Federal 

Register, in text or Adobe Portable 

Document Format (PDF) on the Internet 

at the following site: http://www.ed.gov/ 

news/fedregister. 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
42428 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

To use PDF you must have Adobe 

Acrobat Reader, which is available free 

at this site. If you have questions about 

using PDF, call the U.S. Government 

Printing Office (GPO), toll free, at 1– 

888–293–6498; or in the Washington, 

DC, area at (202) 512–1530. 

Note: 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 on GPO 

Access at: http://www.gpoaccess.gov/nara/ 

index.html. 

(Catalog of Federal Domestic Assistance 

Numbers: 84.063 Federal Pell Grant Program; 

84.033 Federal Work-Study Program; 84.379 

TEACH Grant Program; 84.069 LEAP) 

List of Subjects 

34 CFR Part 600 

Colleges and universities, Foreign 

relations, Grant programs-education, 

Loan programs-education, Reporting 

and recordkeeping requirements, 

Student aid, Vocational education. 

34 CFR Part 668 

Administrative practice and 

procedure, Aliens, Colleges and 

universities, Consumer protection, 

Grant programs-education, Loan 

programs-education, Reporting and 

recordkeeping requirements, Selective 

Service System, Student aid, Vocational 

education. 

34 CFR Part 675 

Colleges and universities, 

Employment, Grant programseducation, Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 686 

Administrative practice and 

procedure, Colleges and universities, 

Education, Elementary and secondary 

education, Grant programs-education, 

Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 690 

Colleges and universities, Education 

of disadvantaged, Grant programseducation, Reporting and recordkeeping 

requirements, Student aid. 

34 CFR Part 692 

Colleges and universities, Grant 

programs-education, Reporting and 

recordkeeping requirements, Student 

aid. 

Dated: July 30, 2009. 

Arne Duncan, 

Secretary of Education. 

For the reasons discussed in the 

preamble, the Secretary proposes to 

amend parts 600, 668, 675, 686, 690, 

and 692 of title 34 of the Code of 

Federal Regulations as follows: 

PART 600—INSTITUTIONAL 

ELIGIBILITY UNDER THE HIGHER 

EDUCATION ACT OF 1965, AS 

AMENDED 

1. The authority citation for part 600 

continues to read as follows: 

Authority: 20 U.S.C. 1001, 1002, 1003, 

1088, 1091, 1094, 1099b, and 1099c, unless 

otherwise noted. 

2. Section 600.2 is amended by: 

A. Revising paragraph (1)(i) of the 

definition of educational program. 

B. Adding, in alphabetical order, a 

definition for teach-out plan. 

C. Revising the authority citation at 

the end of the section. 

The revisions and addition read as 

follows: 

§ 600.2 Definitions. 

* * * * * 

Educational program: (1) * * * 

(i) Leads to an academic, professional, 

or vocational degree, or certificate, or 

other recognized educational credential, 

or is a comprehensive transition and 

postsecondary program, as described in 

34 CFR part 668, subpart O; and 

* * * * * 

Teach-out plan: A written plan 

developed by an institution that 

provides for the equitable treatment of 

students if an institution, or an 

institutional location that provides 100 

percent of at least one program, ceases 

to operate before all students have 

completed their program of study, and 

may include, if required by the 

institution’s accrediting agency, a teachout agreement between institutions. 

* * * * * 

(Authority: 20 U.S.C. 1071 et seq., 1078–2, 

1088, 1091, 1094, 1099b, 1099c, 1141; 26 

U.S.C. 501(c)) 

3. Section 600.4 is amended by: 

A. Revising paragraph (a)(4). 

B. Revising the authority citation at 

the end of the section. 

The revisions read as follows: 

§ 600.4 Institution of higher education. 

(a) * * * 

(4)(i) Provides an educational 

program— 

(A) For which it awards an associate, 

baccalaureate, graduate, or professional 

degree; 

(B) That is at least a two-academicyear program acceptable for full credit 

toward a baccalaureate degree; or 

(C) That is at least a one-academicyear training program that leads to a 

certificate, degree, or other recognized 

educational credential and prepares 

students for gainful employment in a 

recognized occupation; and 

(ii) May provide a comprehensive 

transition and postsecondary program, 

as described in 34 CFR part 668, subpart 

O; and 

* * * * * 

(Authority: 20 U.S.C. 1091, 1094, 1099b, 

1141(a)) 

4. Section 600.5 is amended by: 

A. Revising paragraph (a)(5). 

B. In paragraph (a)(6), adding the 

word ‘‘and’’ after the punctuation ‘‘;’’. 

C. In paragraph (a)(7), removing the 

word ‘‘; and’’ and adding, in its place, 

the punctuation ‘‘.’’. 

D. Removing paragraph (a)(8). 

E. Removing paragraphs (d) through 

(g). 

F. Redesignating paragraph (h) as 

paragraph (d). 

G. Adding a new paragraph (e). 

H. Revising the OMB control number 

and authority citation at the end of the 

section. 

The revisions and addition read as 

follows: 

§ 600.5 Proprietary institution of higher 

education. 

(a) * * * 

(5)(i)(A) Provides an eligible program 

of training, as defined in 34 CFR 668.8, 

to prepare students for gainful 

employment in a recognized 

occupation; or 

(B)(1) Provides a program leading to a 

baccalaureate degree in liberal arts, as 

defined in paragraph (e) of this section, 

and has provided that program since 

January 1, 2009; and 

(2) Is accredited by a recognized 

regional accrediting agency or 

association, and has continuously held 

such accreditation since October 1, 

2007, or earlier; and 

(ii) May provide a comprehensive 

transition and postsecondary program 

for students with intellectual 

disabilities, as provided in 34 CFR part 

668, subpart O; 

* * * * * 

(e) For purposes of this section, a 

‘‘program leading to a baccalaureate 

degree in liberal arts’’ is a program that 

the institution’s recognized regional 

accreditation agency or organization 

determines, is a general instructional 

program in the liberal arts subjects, the 

humanities disciplines, or the general 

curriculum, falling within one or more 

of the following generally-accepted 

instructional categories comprising such 

programs, but including only 

instruction in regular programs, and 

excluding independently-designed 

programs, individualized programs, and 

unstructured studies: 


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(1) A program that is a structured 

combination of the arts, biological and 

physical sciences, social sciences, and 

humanities, emphasizing breadth of 

study. 

(2) An undifferentiated program that 

includes instruction in the general arts 

or general science. 

(3) A program that focuses on 

combined studies and research in the 

humanities subjects as distinguished 

from the social and physical sciences, 

emphasizing languages, literatures, art, 

music, philosophy, and religion. 

(4) Any single instructional program 

in liberal arts and sciences, general 

studies, and humanities not listed in 

paragraph (e)(1) through (e)(3) of this 

section. 

(Approved by the Office of Management and 

Budget under control number 1845–0012) 

(Authority: 20 U.S.C. 1088, 1091) 

5. Section 600.6 is amended by: 

A. Revising paragraph (a)(4). 

B. Revising the authority citation at 

the end of the section. 

The revisions read as follows: 

§ 600.6 Postsecondary vocational 

institution. 

(a) * * * 

(4)(i) Provides an eligible program of 

training, as defined in 34 CFR 668.8, to 

prepare students for gainful 

employment in a recognized 

occupation; and 

(ii) May provide a comprehensive 

transition and postsecondary program 

for students with intellectual 

disabilities, as provided in 34 CFR part 

668, subpart O; 

* * * * * 

(Authority: 20 U.S.C. 1088, 1091, 1094(c)(3)) 

6. Section 600.32 is amended by: 

A. In paragraph (a), removing the 

words ‘‘(b) and (c)’’ and adding, in their 

place, the words ‘‘(b), (c), and (d)’’. 

B. Redesignating paragraph (d) as 

paragraph (e). 

C. Adding a new paragraph (d). 

D. Revising the authority citation at 

the end of the section. 

The addition and revision read as 

follows: 

§ 600.32 Eligibility of additional locations. 

* * * * * 

(d)(1) An institution that conducts a 

teach-out at a site of a closed institution 

may apply to have that site approved as 

an additional location if— 

(i) The closed institution ceased 

operations as result of an action taken 

by the Secretary to limit, suspend, or 

terminate the institution’s participation 

under § 600.41 or subpart G of this part, 

or as a result of an emergency action 

taken by the Secretary under 34 CFR 

668.83; and 

(ii) The teach-out plan required under 

34 CFR 668.14(b)(31) is approved by the 

closed institution’s accrediting agency. 

(2)(i) An institution that conducts a 

teach-out and is approved to add an 

additional location described in 

paragraph (d)(1) of this section— 

(A) Does not have to meet the twoyear requirement of § 600.5(a)(7) or 

§ 600.6(a)(6) for the additional location 

described in paragraph (d)(1) of this 

section; 

(B) Is not responsible for any 

liabilities of the closed institution as 

provided under paragraphs (c)(1) and 

(c)(2) of this section if the institutions 

are not related parties and there is no 

commonality of ownership or 

management between the institutions, 

as described in 34 CFR 668.188(b) and 

34 CFR 668.207(b); and 

(C) Will not have the default rate of 

the closed institution included in the 

calculation of its default rate, as would 

otherwise be required under 34 CFR 

668.184 and 34 CFR 668.203, if the 

institutions are not related parties and 

there is no commonality of ownership 

or management between the 

institutions, as described in 34 CFR 

668.188(b) and 34 CFR 668.207(b). 

(ii) As a condition for approving an 

additional location under paragraph 

(d)(1) of this section, the Secretary may 

require that payments from the 

institution conducting the teach-out to 

the owners or related parties of the 

closed institution, are used to satisfy 

any liabilities owed by the closed 

institution. 

* * * * * 

(Authority: 20 U.S.C. 1088, 1099c, 1141) 

PART 668—STUDENT ASSISTANCE 

GENERAL PROVISIONS 

7. The authority citation for part 668 

continues to read as follows: 

Authority: 20 U.S.C. 1001, 1002, 1003, 

1070g, 1085, 1088, 1091, 1092, 1094, 1099c, 

and 1099c-1, unless otherwise noted. 

8. Section 668.8 is amended by: 

A. Revising paragraph (n). 

B. Removing the OMB control number 

at the end of the section. 

The revision reads as follows: 

§ 668.8 Eligible program. 

* * * * * 

(n) For title IV, HEA program 

purposes, eligible program includes a 

direct assessment program approved by 

the Secretary under § 668.10 and a 

comprehensive transition and 

postsecondary program approved by the 

Secretary under § 668.232. 

* * * * * 

9. Section 668.13(c) is revised to read 

as follows: 

§ 668.13 Certification procedures. 

* * * * * 

(c) Provisional certification. (1)(i) The 

Secretary may provisionally certify an 

institution if— 

(A) The institution seeks initial 

participation in a Title IV, HEA 

program; 

(B) The institution is an eligible 

institution that has undergone a change 

in ownership that results in a change in 

control according to the provisions of 34 

CFR part 600; 

(C) The institution is a participating 

institution— 

(1) That is applying for a certification 

that the institution meets the standards 

of this subpart; 

(2) That the Secretary determines has 

jeopardized its ability to perform its 

financial responsibilities by not meeting 

the factors of financial responsibility 

under § 668.15 or the standards of 

administrative capability under 

§ 668.16; and 

(3) Whose participation has been 

limited or suspended under subpart G of 

this part, or voluntarily enters into 

provisional certification; 

(D) The institution seeks a renewal of 

participation in a title IV, HEA program 

after the expiration of a prior period of 

participation in that program; or 

(E) The institution is a participating 

institution that was accredited or 

preaccredited by a nationally recognized 

accrediting agency on the day before the 

Secretary withdrew the Secretary’s 

recognition of that agency according to 

the provisions contained in 34 CFR part 

603. 

(ii) A proprietary institution’s 

certification automatically becomes 

provisional if it does not derive at least 

10 percent of its revenue for any fiscal 

year from sources other than title IV, 

HEA program funds, as required under 

§ 668.14(b)(16). 

* * * * * 

10. Section 668.14 is amended by: 

A. Adding paragraph (b)(16). 

B. In paragraph (b)(25)(ii), removing 

the word ‘‘and’’ that appears after the 

punctuation ‘‘;’’. 

C. Adding paragraph (b)(30). 

D. Adding paragraph (b)(31). 

E. Revising the OMB control number 

at the end of the section. 

The additions and revision read as 

follows: 

§ 668.14 Program participation agreement. 

* * * * * 

(b) * * * 

(16) For a proprietary institution, the 

institution will derive at least 10 


srobinson on DSKHWCL6B1PROD with PROPOSALS2
42430 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Proposed Rules 

percent of its revenues for each fiscal 

year from sources other than title IV, 

HEA program funds, as provided in 

§ 668.28(a) and (b), or be subject to 

sanctions described in § 668.28(c); 

* * * * * 

(30) The institution— 

(i) Has developed and implemented 

written plans to effectively combat the 

unauthorized distribution of 

copyrighted material by users of the 

institution’s network, without unduly 

interfering with educational and 

research use of the network, that 

include— 

(A) The use of one or more 

technology-based deterrents; 

(B) Mechanisms for educating and 

informing its community about 

appropriate versus inappropriate use of 

copyrighted material, including that 

described in § 668.43(a)(10); 

(C) Procedures for handling 

unauthorized distribution of 

copyrighted material, including 

disciplinary procedures; and 

(D) Procedures for periodically 

reviewing the effectiveness of the plans 

to combat the unauthorized distribution 

of copyrighted materials by users of the 

institution’s network using relevant 

assessment criteria. No particular 

technology measures are favored or 

required for inclusion in an institution’s 

plans, and each institution retains the 

authority to determine what its 

particular plans for compliance with 

paragraph (b)(30) of this section will be, 

including those that prohibit content 

monitoring; and 

(ii) Will, in consultation with the 

chief technology officer or other 

designated officer of the institution— 

(A) Periodically review the legal 

alternatives for downloading or 

otherwise acquiring copyrighted 

material; 

(B) Make available the results of the 

review in paragraph (b)(30)(ii)(A) of this 

section to its students through a Web 

site or other means; and 

(C) To the extent practicable, offer 

legal alternatives for downloading or 

otherwise acquiring copyrighted 

material, as determined by the 

institution; and 

(31) The institution will submit a 

teach-out plan to its accrediting agency 

in compliance with 34 CFR 602.24(c), 

and the standards of the institution’s 

accrediting agency upon the occurrence 

of any of the following events: 

(i) The Secretary initiates the 

limitation, suspension, or termination of 

the participation of an institution in any 

title IV, HEA program under 34 CFR 

600.41 or subpart G of this part or 

initiates an emergency action under 

§ 668.83. 

(ii) The institution’s accrediting 

agency acts to withdraw, terminate, or 

suspend the accreditation or 

preaccreditation of the institution. 

(iii) The institution’s State licensing 

or authorizing agency revokes the 

institution’s license or legal 

authorization to provide an educational 

program. 

(iv) The institution intends to close a 

location that provides 100 percent of at 

least one program. 

(v) The institution otherwise intends 

to cease operations. 

* * * * * 

(Approved by the Office of Management and 

Budget under control number 1845–0022) 

* * * * * 

11. Section 668.18 is added to subpart 

B of part 668 to read as follows: 

§ 668.18 Readmission requirements for 

servicemembers. 

(a) General. (1) An institution may not 

deny readmission to a person who is a 

member of, applies to be a member of, 

performs, has performed, applies to 

perform, or has an obligation to perform, 

service in the uniformed services on the 

basis of that membership, application 

for membership, performance of service, 

application for service, or obligation to 

perform service. 

(2)(i) An institution must promptly 

readmit to the institution a person 

described in paragraph (a)(1) of this 

section with the same academic status 

as the student had when the student last 

attended the institution or was last 

admitted to the institution, but did not 

begin attendance because of that 

membership, application for 

membership, performance of service, 

application for service, or obligation to 

perform service. 

(ii) ‘‘Promptly readmit’’ means that 

the institution must readmit the student 

into the next class or classes in the 

student’s program beginning after the 

student provides notice of his or her 

intent to reenroll, unless the student 

requests a later date of readmission or 

unusual circumstances require the 

institution to admit the student at a later 

date. 

(iii) To readmit a person with the 

‘‘same academic status’’ means that the 

institution admits the student— 

(A) To the same program to which he 

or she was last admitted by the 

institution or, if that exact program is no 

longer offered, the program that is most 

similar to that program, unless the 

student requests or agrees to admission 

to a different program; 

(B) At the same enrollment status that 

the student last held at the institution, 

unless the student requests or agrees to 

admission at a different enrollment 

status; 

(C) With the same number of credit 

hours or clock hours completed 

previously by the student, unless the 

student is readmitted to a different 

program to which the completed credit 

hours or clock hours are not 

transferable; 

(D) With the same academic standing 

(e.g., with the same satisfactory 

academic progress status) the student 

previously had; 

(E)(1) If the student is readmitted to 

the same program, for the first academic 

year in which the student returns, 

assessing the same institutional charges 

that the student was or would have been 

assessed for the academic year during 

which the student left the institution; or 

(2) If the student is admitted to a 

different program, and for subsequent 

academic years for a student admitted to 

the same program, assessing no more 

than the institutional charges that other 

students in the program are assessed for 

that academic year; and 

(F) Waiving charges for equipment 

required in lieu of equipment the 

student paid for when the student was 

previously enrolled. 

(iv)(A) If the institution determines 

that the student is not prepared to 

resume the program with the same 

academic status at the point where the 

student left off, or will not be able to 

complete the program, the institution 

must make reasonable efforts to help the 

student become prepared or to enable 

the student to complete the program 

including, but not limited to, providing 

refresher courses at no extra cost and 

allowing the student to retake a pretest 

at no extra cost. 

(B) The institution is not required to 

readmit the student on his or her return 

if— 

(1) After reasonable efforts by the 

institution, the institution determines 

that the student is not prepared to 

resume the program at the point where 

he or she left off; 

(2) After reasonable efforts by the 

institution, the institution determines 

that the student is unable to complete 

the program; or 

(3) The institution determines that 

there are no reasonable efforts the 

institution can take to prepare the 

student to resume the program at the 

point where he or she left off or to 

enable the student to complete the 

program; 

(C)(1) ‘‘Reasonable efforts’’ means 

actions that do not place an undue 

hardship on the institution. 

(2) ‘‘Undue hardship’’ means an 

action requiring significant difficulty or 

expense. 


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(D) The institution carries the burden 

to prove by a preponderance of the 

evidence that the student is not 

prepared to resume the program with 

the same academic status at the point 

where the student left off, or that the 

student will not be able to complete the 

program. 

(3) This section applies to an 

institution that has continued in 

operation since the student ceased 

attending or was last admitted to the 

institution but did not begin attendance, 

notwithstanding any changes of 

ownership of the institution since the 

student ceased attendance. 

(4) The requirements of this section 

supersede any State law (including any 

local law or ordinance), contract, 

agreement, policy, plan, practice, or 

other matter that reduces, limits, or 

eliminates in any manner any right or 

benefit provided by this section. 

(b) Service in the uniformed services. 

For purposes of this section, service in 

the uniformed services means service, 

whether voluntary or involuntary, in the 

Armed Forces, including service by a 

member of the National Guard or 

Reserve, on active duty, active duty for 

training, or full-time National Guard 

duty under Federal authority, for a 

period of more than 30 consecutive days 

under a call or order to active duty of 

more than 30 consecutive days. 

(c) Readmission procedures. (1) Any 

student whose absence from an 

institution is necessitated by reason of 

service in the uniformed services shall 

be entitled to readmission to the 

institution if— 

(i) Except as provided in paragraph 

(d) of this section, the student (or an 

appropriate officer of the Armed Forces 

or official of the Department of Defense) 

gives advance oral or written notice of 

such service to an office designated by 

the institution, and provides such notice 

as far in advance as is reasonable under 

the circumstances; 

(ii) The cumulative length of the 

absence and of all previous absences 

from that institution by reason of service 

in the uniformed services, including 

only the time the student spends 

actually performing service in the 

uniformed services, does not exceed five 

years; and 

(iii) Except as provided in paragraph 

(f) of this section, the student gives oral 

or written notice of his or her intent to 

return to an office designated by the 

institution— 

(A) For a student who completes a 

period of service in the uniformed 

services, not later than three years after 

the completion of the period of service; 

or 

(B) For a student who is hospitalized 

for or convalescing from an illness or 

injury incurred in or aggravated during 

the performance of service in the 

uniformed services, two years after the 

end of the period that is necessary for 

recovery from such illness or injury. 

(2)(i) An institution must designate 

one or more offices at the institution 

that a student may contact to provide 

notification of service required by 

paragraph (c)(1)(i) of this section and 

notification of intent to return required 

by paragraph (c)(1)(iii) of this section. 

(ii) An institution may not require 

that the notice provided by the student 

under paragraph (c)(1)(i) or (c)(1)(iii) of 

this section follow any particular 

format. 

(iii) The notice provided by the 

student under paragraph (c)(1)(i) of this 

section— 

(A) May not be subject to any rule for 

timeliness; timeliness must be 

determined by the facts in any 

particular case; and 

(B) Does not need to indicate whether 

the student intends to return to the 

institution. 

(iv) For purposes of paragraph (c)(1)(i) 

of this section, an ‘‘appropriate officer’’ 

is a commissioned, warrant, or 

noncommissioned officer authorized to 

give such notice by the military service 

concerned. 

(d) Exceptions to advance notice. (1) 

No notice is required under paragraph 

(c)(1)(i) of this section if the giving of 

such notice is precluded by military 

necessity, such as— 

(i) A mission, operation, exercise, or 

requirement that is classified; or 

(ii) A pending or ongoing mission, 

operation, exercise, or requirement that 

may be compromised or otherwise 

adversely affected by public knowledge. 

(2) Any student (or an appropriate 

officer of the Armed Forces or official of 

the Department of Defense) who did not 

give advance written or oral notice of 

service to the appropriate official at the 

institution in accordance with 

paragraph (c)(1) of this section may 

meet the notice requirement by 

submitting, at the time the student seeks 

readmission, an attestation to the 

institution that the student performed 

service in the uniformed services that 

necessitated the student’s absence from 

the institution. 

(e) Cumulative length of absence. For 

purposes of paragraph (c)(1)(ii) of this 

section, a student’s cumulative length of 

absence from an institution does not 

include any service— 

(1) That is required, beyond five 

years, to complete an initial period of 

obligated service; 

(2) During which the student was 

unable to obtain orders releasing the 

student from a period of service in the 

uniformed services before the expiration 

of the five-year period and such 

inability was through no fault of the 

student; or 

(3) Performed by a member of the 

Armed Forces (including the National 

Guard and Reserves) who is— 

(i) Ordered to or retained on active 

duty under— 

(A) 10 U.S.C. 688 (involuntary active 

duty by a military retiree); 

(B) 10 U.S.C. 12301(a) (involuntary 

active duty in wartime); 

(C) 10 U.S.C. 12301(g) (retention on 

active duty while in captive status); 

(D) 10 U.S.C. 12302 (involuntary 

active duty during a national emergency 

for up to 24 months); 

(E) 10 U.S.C. 12304 (involuntary 

active duty for an operational mission 

for up to 270 days); 

(F) 10 U.S.C. 12305 (involuntary 

retention on active duty of a critical 

person during time of crisis or other 

specific conditions); 

(G) 14 U.S.C. 331 (involuntary active 

duty by retired Coast Guard officer); 

(H) 14 U.S.C. 332 (voluntary active 

duty by retired Coast Guard officer); 

(I) 14 U.S.C. 359 (involuntary active 

duty by retired Coast Guard enlisted 

member); 

(J) 14 U.S.C. 360 (voluntary active 

duty by retired Coast Guard enlisted 

member); 

(K) 14 U.S.C. 367 (involuntary 

retention of Coast Guard enlisted 

member on active duty); or 

(L) 14 U.S.C. 712 (involuntary active 

duty by Coast Guard Reserve member 

for natural or man-made disasters); 

(ii) Ordered to or retained on active 

duty (other than for training) under any 

provision of law because of a war or 

national emergency declared by the 

President or the Congress, as 

determined by the Secretary concerned; 

(iii) Ordered to active duty (other than 

for training) in support, as determined 

by the Secretary concerned, of an 

operational mission for which personnel 

have been ordered to active duty under 

section 12304 of title 10, United States 

Code; 

(iv) Ordered to active duty in support, 

as determined by the Secretary 

concerned, of a critical mission or 

requirement of the Armed Forces 

(including the National Guard or 

Reserve); or 

(v) Called into Federal service as a 

member of the National Guard under 

chapter 15 of title 10, United States 

Code, or section 12406 of title 10, 

United States Code (i.e., called to 

respond to an invasion, danger of 


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invasion, rebellion, danger of rebellion, 

insurrection, or the inability of the 

President with regular forces to execute 

the laws of the United States). 

(f) Notification of intent to reenroll. A 

student who fails to apply for 

readmission within the periods 

described in paragraph (c)(1)(iii) of this 

section does not automatically forfeit 

eligibility for readmission to the 

institution, but is subject to the 

institution’s established leave of 

absence policy and general practices. 

(g) Documentation. (1) A student who 

submits an application for readmission 

to an institution under paragraph 

(c)(1)(iii) of this section shall provide to 

the institution documentation to 

establish that— 

(i) The student has not exceeded the 

service limitation in paragraph (c)(1)(ii) 

of this section; and 

(ii) The student’s eligibility for 

readmission has not been terminated 

due to an exception in paragraph (h) of 

this section. 

(2)(i) Documents that satisfy the 

requirements of paragraph (g)(1) of this 

section include, but are not limited to, 

the following: 

(A) DD (Department of Defense) 214 

Certificate of Release or Discharge from 

Active Duty. 

(B) Copy of duty orders prepared by 

the facility where the orders were 

fulfilled carrying an endorsement 

indicating completion of the described 

service. 

(C) Letter from the commanding 

officer of a Personnel Support Activity 

or someone of comparable authority. 

(D) Certificate of completion from 

military training school. 

(E) Discharge certificate showing 

character of service. 

(F) Copy of extracts from payroll 

documents showing periods of service. 

(G) Letter from National Disaster 

Medical System (NDMS) Team Leader 

or Administrative Officer verifying dates 

and times of NDMS training or Federal 

activation. 

(ii) The types of documents that are 

necessary to establish eligibility for 

readmission will vary from case to case. 

Not all of these documents are available 

or necessary in every instance to 

establish readmission eligibility. 

(3) An institution may not delay or 

attempt to avoid a readmission of a 

student under this section by 

demanding documentation that does not 

exist, or is not readily available, at the 

time of readmission. 

(h) Termination of readmission 

eligibility. A student’s eligibility for 

readmission to an institution under this 

section by reason of such student’s 

service in the uniformed services 

terminates upon the occurrence of any 

of the following events: 

(1) A separation of such person from 

the Armed Forces (including the 

National Guard and Reserves) with a 

dishonorable or bad conduct discharge. 

(2) A dismissal of a commissioned 

officer permitted under section 1161(a) 

of title 10, United States Code by 

sentence of a general court-martial; in 

commutation of a sentence of a general 

court-martial; or, in time of war, by 

order of the President. 

(3) A dropping of a commissioned 

officer from the rolls pursuant to section 

1161(b) of title 10, United States Code 

due to absence without authority for at 

least three months; separation by reason 

of a sentence to confinement adjudged 

by a court-martial; or, a sentence to 

confinement in a Federal or State 

penitentiary or correctional institution. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW1) 

Authority: 

20 U.S.C. 1088 et seq.) 

12. In 668.23, revise paragraph (d)(4) 

to read as follows: 

§ 668.23 Compliance audits and audited 

financial statements. 

* * * * * 

(d) * * * 

(4) Disclosure of title IV, HEA 

program revenue. A proprietary 

institution must disclose in a footnote to 

its financial statement audit the 

percentage of its revenues derived from 

the title IV, HEA program funds that the 

institution received during the fiscal 

year covered by that audit. The revenue 

percentage must be calculated in 

accordance with § 668.28. The 

institution must also report in the 

footnote the non-Federal and Federal 

revenue by source that was included in 

the 90/10 calculation. 

* * * * * 

13. Section 668.28 is added to subpart 

B of part 668 to read as follows: 

§ 668.28 Non-title IV revenue (90/10). 

(a) General. (1) Calculating the 

revenue percentage. A proprietary 

institution determines whether it 

satisfies the requirement in 

§ 668.14(b)(16) that at least 10 percent of 

its revenue is derived from sources 

other than title IV, HEA program funds 

by using the formula in appendix C of 

this subpart to calculate its revenue 

percentage for its latest complete fiscal 

year. 

(2) Cash basis accounting. Except for 

institutional loans made to students 

under paragraph (a)(5)(i) of this section, 

the institution must use the cash basis 

of accounting in calculating its revenue 

percentage. 

(3) Revenue generated from programs 

and activities. The institution must 

consider as revenue only those funds it 

generates from— 

(i) Tuition, fees, and other 

institutional charges for students 

enrolled in eligible programs as defined 

in § 668.8; 

(ii) Activities conducted by the 

institution that are necessary for the 

education and training of its students 

provided those activities are— 

(A) Conducted on campus or at a 

facility under the institution’s control; 

(B) Performed under the supervision 

of a member of the institution’s faculty; 

and 

(C) Required to be performed by all 

students in a specific educational 

program at the institution; and 

(iii) Funds paid by a student, or on 

behalf of a student by a party other than 

the institution, for an education or 

training program that is not eligible 

under § 668.8 if the program— 

(A) Is approved or licensed by the 

appropriate State agency; 

(B) Is accredited by an accrediting 

agency recognized by the Secretary 

under 34 CFR part 602; 

(C) Provides an industry-recognized 

credential or certification, or prepares 

students to take an examination for an 

industry-recognized credential or 

certification issued by an independent 

third party; 

(D) Provides training needed for 

students to maintain State licensing 

requirements; or 

(E) Provides training needed for 

students to meet additional licensing 

requirements for specialized training for 

practitioners that already meet the 

general licensing requirements in that 

field. 

(4) Application of funds. The 

institution must presume that any title 

IV, HEA program funds it disburses, or 

delivers, to or on behalf of a student will 

be used to pay the student’s tuition, 

fees, or institutional charges, regardless 

of whether the institution credits the 

funds to the student’s account or pays 

the funds directly to the student, except 

to the extent that the student’s tuition, 

fees, or other charges are satisfied by— 

(i) Grant funds provided by nonFederal public agencies or private 

sources independent of the institution; 

(ii) Funds provided under a 

contractual arrangement with a Federal, 

State, or local government agency for 

the purpose of providing job training to 

low-income individuals who need that 

training; 

(iii) Funds used by a student from a 

savings plan for educational expenses 

established by or on behalf of the 

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special tax treatment under the Internal 

Revenue Code of 1986; or 

(iv) Institutional scholarships as 

provided under paragraph (a)(5)(iv) of 

this section. 

(5) Revenue generated from 

institutional aid. The institution must 

include the following institutional aid 

as revenue: 

(i) For loans made to students, 

including funds advanced to students 

under installment sales contracts, on or 

after July 1, 2008 and prior to July 1, 

2012, include as revenue the net present 

value of the loans made to students 

during the fiscal year, as calculated 

under paragraph (b) of this section, if 

the loans— 

(A) Are bona fide as evidenced by 

standalone repayment agreements 

between the students and the institution 

that are enforceable promissory notes; 

(B) Are issued at intervals related to 

the institution’s enrollment periods; 

(C) Are subject to regular loan 

repayments and collections by the 

institution; and 

(D) Are separate from the enrollment 

contracts signed by the students. 

(ii) For loans made to students before 

July 1, 2008, include as revenue only 

the amount of payments made on those 

loans that the institution received 

during the fiscal year. 

(iii) For loans made to students on or 

after July 1, 2012, include as revenue 

only the amount of payments made on 

those loans that the institution received 

during the fiscal year. 

(iv) For scholarships provided by the 

institution in the form of monetary aid 

or tuition discount and based on the 

academic achievement or financial need 

of its students, include as revenue the 

amount disbursed to students during the 

fiscal year. The scholarships must be 

disbursed from an established restricted 

account and only to the extent that the 

funds in that account represent 

designated funds from an outside source 

or income earned on those funds. 

(6) Revenue generated from loan 

funds in excess of loan limits prior to 

the Ensuring Continued Access to 

Student Loans Act of 2008 (ECASLA). 

For each student who receives an 

unsubsidized loan under the FFEL or 

Direct Loan programs on or after July 1, 

2008 and prior to July 1, 2011, the 

amount of the loan disbursement for a 

payment period that exceeds the 

disbursement for which the student 

would have been eligible for that 

payment period under the loan limit in 

effect on the day prior to enactment of 

the ECASLA is included as revenue 

from a source other than title IV, HEA 

program funds but only to the extent 

that the excess amount pays for tuition, 

fees, or institutional charges remaining 

on the student’s account after title IV, 

HEA program funds are applied. 

(7) Funds excluded from revenues. 

For the fiscal year, the institution does 

not include— 

(i) The amount of Federal Work Study 

(FWS) wages paid directly to the 

student. However, if the institution 

credits the student’s account with FWS 

funds, those funds are included as 

revenue; 

(ii) The amount of funds received by 

the institution from a State under the 

LEAP, SLEAP, or GAP programs; 

(iii) The amount of institutional funds 

used to match title IV, HEA program 

funds; 

(iv) The amount of title IV, HEA 

program funds refunded or returned 

under § 668.22, including funds 

refunded or returned under paragraph 

(a)(6) of this section; or 

(v) The amount the student is charged 

for books, supplies, and equipment 

unless the institution includes that 

amount as tuition, fees, or other 

institutional charges. 

(b) Net present value (NPV). (1) As 

illustrated in appendix C of this subpart, 

an institution calculates the NPV of the 

loans it made under paragraph (a)(5)(i) 

of this section by— 

(i) Using the formula, NPV = sum of 

the discounted cash flows Rt

/(1+i)t, 

where— 

(A) The variable ‘‘i’’ is the discount 

rate. For purposes of this section, an 

institution must use the most recent 

annual inflation rate as the discount 

rate; 

(B) The variable ‘‘t’’ is time or period 

of the cash flow, in years, from the time 

the loan entered repayment; and 

(C) The variable ‘‘Rt

’’ is the net cash 

flow at time or period t; and 

(ii) Applying the NPV formula to the 

loans made during the fiscal year by— 

(A) If the loans have substantially the 

same repayment period, using that 

repayment period for the range of values 

of variable ‘‘t’’; or 

(B) Grouping the loans by repayment 

period and using the repayment period 

for each group for the range of values of 

variable ‘‘t’’; and 

(C) For each group of loans, as 

applicable, multiplying the total annual 

payments due on the loans by the 

institution’s loan collection rate (e.g., 

the total amount of payments collected 

divided by the total amount of payments 

due). The resulting amount is used for 

variable ‘‘R’’ in each period ‘‘t’’, for each 

group of loans that a NPV is calculated. 

(2) Instead of performing the 

calculations in paragraph (b)(1) of this 

section, using 50 percent of the total 

amount of loans that the institution 

made during the fiscal year as the NPV. 

However, if the institution chooses to 

use this 50 percent calculation, the 

institution may not sell any of these 

loans until they have been in repayment 

for at least two years. 

(c) Sanctions. If an institution does 

not derive at least 10 percent of its 

revenue from sources other than title IV, 

HEA program funds— 

(1) For two consecutive fiscal years, it 

loses its eligibility to participate in the 

title IV, HEA programs for at least two 

fiscal years. To regain eligibility, the 

institution must demonstrate that it 

complied with the State licensure and 

accreditation requirements under 34 

CFR 600.5(a)(4) and (a)(6), and the 

financial responsibility requirements 

under subpart L of this part, for a 

minimum of two fiscal years after the 

fiscal year it became ineligible; or 

(2) For any fiscal year, it becomes 

provisionally certified under 

§ 668.13(c)(1)(ii) for the two fiscal years 

after the fiscal year it failed to satisfy the 

revenue requirement. However, the 

institution’s provisional certification 

terminates on— 

(i) The expiration date of the 

institution’s program participation 

agreement that was in effect on the date 

the Secretary determined the institution 

failed this requirement; or 

(ii) The date the institution loses its 

eligibility to participate under 

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

(3) It must notify the Secretary no 

later than 45 days after the end of its 

fiscal year that it failed to meet this 

requirement. 

(Approved by Office of Management and 

Budget under control number 1845–NEW2) 

(Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 

1094, 1099a-3, 1099c, 1141) 

14. Appendix C is added to subpart B 

of part 668 to read as follows: 

BILLING CODE 4000–01–P 


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BILLING CODE 4000–01–C 

15. Section 668.32 is amended by: 

A. Revising the introductory text. 

B. In paragraph (a)(1)(iii), adding the 

word ‘‘and’’ after the punctuation ‘‘;’’. 

C. In paragraph (a)(2), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

D. In paragraph (b), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

E. In paragraph (c)(4)(ii), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

F. In paragraph (d), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

G. In paragraph (e)(4)(ii), removing 

the punctuation ‘‘;’’ and adding, in its 

place, the punctuation ‘‘.’’. 

H. In paragraph (f), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

I. In paragraph (g)(4), removing the 

punctuation ‘‘;’’ at the end of the 

paragraph and adding, in its place, the 

punctuation ‘‘.’’. 

J. In paragraph (h), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

K. In paragraph (i), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

L. In paragraph (j), removing the 

punctuation ‘‘;’’ and adding, in its place, 

the punctuation ‘‘.’’. 

M. In paragraph (k)(9), removing the 

word ‘‘; and’’ and adding, in its place, 

the punctuation ‘‘.’’. 

N. In paragraph (l), removing the 

word ‘‘; and’’ and adding, in its place, 

the punctuation ‘‘.’’. 

O. Adding paragraph (n). 

The revision and addition read as 

follows: 

§ 668.32 Student eligibility—general. 

A student is eligible to receive title IV, 

HEA program assistance if the student 

either meets all of the requirements in 

paragraphs (a) through (m) of this 

section or meets the requirement in 

paragraph (n) of this section as follows: 

* * * * * 

(n) Is enrolled in a comprehensive 

transition and postsecondary program 

under subpart O of this part and meets 

the student eligibility criteria in that 

subpart. 

* * * * * 

16. Section 668.41 is amended by: 

A. In paragraph (a), adding, in 

alphabetical order, definitions of oncampus student housing facility and 

retention rate. 

B. Revising paragraph (d). 

C. Revising paragraph (e). 

D. In paragraph (g)(1)(i), removing the 

words ‘‘on request’’. 

E. In the OMB control number 

parenthetical at the end of the section, 

removing the words, ‘‘and 1845–0010’’. 

The additions and revisions read as 

follows: 

§ 668.41 Reporting and disclosure of 

information. 

(a) * * * 

On-campus student housing facility: 

A dormitory or other residential facility 

for students that is located on an 


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institution’s campus, as defined in 

§ 668.46(a). 

* * * * * 

Retention rate means a measure of the 

rate at which students persist in their 

educational program at an institution 

expressed as a percentage. For four-year 

institutions, this is the percentage of 

first-time bachelors (or equivalent) 

degree-seeking undergraduates from the 

previous fall who are again enrolled in 

the current fall. For all other 

institutions, this is the percentage of 

first-time degree- or certificate-seeking 

students from the previous fall who 

either re-enrolled or successfully 

completed their program by the current 

fall. 

* * * * * 

(d) General disclosures for enrolled or 

prospective students. An institution 

must make available to any enrolled 

student or prospective student through 

appropriate publications, mailings or 

electronic media, information 

concerning— 

(1) Financial assistance available to 

students enrolled in the institution 

(pursuant to § 668.42). 

(2) The institution (pursuant to 

§ 668.43). 

(3) The institution’s retention rate as 

reported to the Integrated Postsecondary 

Education Data System (IPEDS). In the 

case of a request from a prospective 

student, the information must be made 

available prior to the student’s enrolling 

or entering into any financial obligation 

with the institution. 

(4) The institution’s completion or 

graduation rate and, if applicable, its 

transfer-out rate (pursuant to § 668.45). 

In the case of a request from a 

prospective student, the information 

must be made available prior to the 

student’s enrolling or entering into any 

financial obligation with the institution. 

(5) The placement of, and types of 

employment obtained by, graduates of 

the institution’s degree or certificate 

programs. 

(i) The information provided in 

compliance with this paragraph may be 

gathered from— 

(A) The institution’s placement rate 

for any program, if it calculates such a 

rate; 

(B) State data systems; 

(C) Alumni or student satisfaction 

surveys; or 

(D) Other relevant sources. 

(ii) The institution must identify the 

source of the information provided in 

compliance with this paragraph, as well 

as any time frames and methodology 

associated with it. 

(iii) The institution must disclose any 

placement rates it calculates. 

(6) The types of graduate and 

professional education in which 

graduates of the institution’s four-year 

degree programs enroll. 

(i) The information provided in 

compliance with this paragraph may be 

gathered from— 

(A) State data systems; 

(B) Alumni or student satisfaction 

surveys; or 

(C) Other relevant sources. 

(ii) The institution must identify the 

source of the information provided in 

compliance with this paragraph, as well 

as any time frames and methodology 

associated with it. 

(e) Annual security report and annual 

fire safety report—(1) Enrolled students 

and current employees—annual security 

report and annual fire safety report. By 

October 1 of each year, an institution 

must distribute to all enrolled students 

and current employees its annual 

security report described in § 668.46(b), 

and, if the institution maintains an oncampus student housing facility, its 

annual fire safety report described in 

§ 668.49(b), through appropriate 

publications and mailings, including— 

(i) Direct mailing to each individual 

through the U.S. Postal Service, campus 

mail, or electronic mail; 

(ii) A publication or publications 

provided directly to each individual; or 

(iii) Posting on an Internet Web site or 

an Intranet Web site, subject to 

paragraph (e)(2) and (3) of this section. 

(2) Enrolled students—annual 

security report and annual fire safety 

report. If an institution chooses to 

distribute either its annual security 

report or annual fire safety report to 

enrolled students by posting the 

disclosure or disclosures on an Internet 

Web site or an Intranet Web site, the 

institution must comply with the 

requirements of paragraph (c)(2) of this 

section. 

(3) Current employees—annual 

security report and annual fire safety 

report. If an institution chooses to 

distribute either its annual security 

report or annual fire safety report to 

current employees by posting the 

disclosure or disclosures on an Internet 

Web site or an Intranet Web site, the 

institution must, by October 1 of each 

year, distribute to all current employees 

a notice that includes a statement of the 

report’s availability, the exact electronic 

address at which the report is posted, a 

brief description of the report’s 

contents, and a statement that the 

institution will provide a paper copy of 

the report upon request. 

(4) Prospective students and 

prospective employees—annual security 

report and annual fire safety report. For 

each of the reports, the institution must 

provide a notice to prospective students 

and prospective employees that 

includes a statement of the report’s 

availability, a description of its 

contents, and an opportunity to request 

a copy. An institution must provide its 

annual security report and annual fire 

safety report, upon request, to a 

prospective student or prospective 

employee. If the institution chooses to 

provide either its annual security report 

or annual fire safety report to 

prospective students and prospective 

employees by posting the disclosure on 

an Internet Web site, the notice 

described in this paragraph must 

include the exact electronic address at 

which the report is posted, a brief 

description of the report, and a 

statement that the institution will 

provide a paper copy of the report upon 

request. 

(5) Submission to the Secretary— 

annual security report and annual fire 

safety report. Each year, by the date and 

in a form specified by the Secretary, an 

institution must submit the statistics 

required by §§ 668.46(c) and 668.49(c) 

to the Secretary. 

(6) Publication of the annual fire 

safety report. An institution may 

publish its annual fire safety report 

concurrently with its annual security 

report only if the title of the report 

clearly states that the report contains 

both the annual security report and the 

annual fire safety report. If an 

institution chooses to publish the 

annual fire safety report separately from 

the annual security report, it must 

include information in each of the two 

reports about how to directly access the 

other report. 

* * * * * 

17. Section 668.43 is amended by: 

A. In the introductory text of 

paragraph (a), removing the words 

‘‘upon request’’. 

B. In paragraph (a)(5)(ii), removing the 

word ‘‘and’’ that appears after the 

punctuation ‘‘;’’. 

C. In paragraph (a)(5)(iii), adding the 

word ‘‘and’’ after the punctuation ‘‘;’’. 

D. Adding paragraph (a)(5)(iv). 

E. Revising paragraph (a)(7). 

F. In paragraph (a)(8), removing the 

word ‘‘and’’ that appears after the 

punctuation ‘‘;’’. 

G. In paragraph (a)(9), removing the 

punctuation ‘‘.’’ And adding, in its 

place, the word ‘‘; and’’. 

H. Adding paragraph (a)(10). 

I. In paragraph (b), removing the 

words ‘‘, upon request,’’. 

The additions and revision read as 

follows: 

§ 668.43 Institutional information. 

(a) * * * 


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(5) * * * 

(iv) Any plans by the institution for 

improving the academic program of the 

institution; 

* * * * * 

(7) A description of the services and 

facilities available to students with 

disabilities, including students with 

intellectual disabilities as defined in 

subpart O of this part; 

* * * * * 

(10) Institutional policies and 

sanctions related to copyright 

infringement, including— 

(i) A statement that explicitly informs 

its students that unauthorized 

distribution of copyrighted material, 

including unauthorized peer-to-peer file 

sharing, may subject the students to 

civil and criminal liabilities; 

(ii) A summary of the penalties for 

violation of Federal copyright laws; and 

(iii) A description of the institution’s 

policies with respect to unauthorized 

peer-to-peer file sharing, including 

disciplinary actions that are taken 

against students who engage in illegal 

downloading or unauthorized 

distribution of copyrighted materials 

using the institution’s information 

technology system. 

* * * * * 

18. Section 668.45 is revised to read 

as follows: 

§ 668.45 Information on completion or 

graduation rates. 

(a)(1) An institution annually must 

prepare the completion or graduation 

rate of its certificate- or degree-seeking, 

first-time, full-time undergraduate 

students, as provided in paragraph (b) of 

this section. 

(2) An institution that determines that 

its mission includes providing 

substantial preparation for students to 

enroll in another eligible institution 

must prepare the transfer-out rate of its 

certificate- or degree-seeking, first-time, 

full-time undergraduate students, as 

provided in paragraph (c) of this 

section. 

(3)(i) An institution that offers a 

predominant number of its programs 

based on semesters, trimesters, or 

quarters must base its completion or 

graduation rate, retention rate, and, if 

applicable, transfer-out rate 

calculations, on the cohort of certificateor degree-seeking, first-time, full-time 

undergraduate students who enter the 

institution during the fall term of each 

year. 

(ii) An institution not covered by the 

provisions of paragraph (a)(3)(i) of this 

section must base its completion or 

graduation rate, retention rate, and, if 

applicable, transfer-out rate 

calculations, on the cohort of certificateor degree-seeking, first-time, full-time 

undergraduate students who enter the 

institution between September 1 of one 

year and August 31 of the following 

year. 

(4)(i) An institution covered by the 

provisions of paragraph (a)(3)(i) of this 

section must count as an entering 

student a first-time undergraduate 

student who is enrolled as of October 

15, the end of the institution’s drop-add 

period, or another official reporting date 

as defined in § 668.41(a). 

(ii) An institution covered by 

paragraph (a)(3)(ii) of this section must 

count as an entering student a first-time 

undergraduate student who is enrolled 

for at least— 

(A) 15 days, in a program of up to, 

and including, one year in length; or 

(B) 30 days, in a program of greater 

than one year in length. 

(5) An institution must make available 

its completion or graduation rate and, if 

applicable, transfer-out rate, no later 

than the July 1 immediately following 

the 12-month period ending August 31 

during which 150 percent of the normal 

time for completion or graduation has 

elapsed for all of the students in the 

group on which the institution bases its 

completion or graduation rate and, if 

applicable, transfer-out rate 

calculations. 

(6)(i) Completion or graduation rate 

information must be disaggregated by 

gender, by each major racial and ethnic 

subgroup (as defined in IPEDS), by 

recipients of a Federal Pell Grant, by 

recipients of a Federal Family Education 

Loan or a Federal Direct Loan (other 

than an Unsubsidized Stafford Loan 

made under the Federal Family 

Education Loan Program or a Federal 

Direct Unsubsidized Stafford Loan) who 

did not receive a Federal Pell Grant, and 

by recipients of neither a Federal Pell 

Grant nor a Federal Family Education 

Loan or a Federal Direct Loan (other 

than an Unsubsidized Stafford Loan 

made under the Federal Family 

Education Loan Program or a Federal 

Direct Unsubsidized Loan) if the 

number of students in such group or 

with such status is sufficient to yield 

statistically reliable information and 

reporting will not reveal personally 

identifiable information about an 

individual student. If such number is 

not sufficient for such purpose, i.e., is 

too small to be meaningful, then the 

institution shall note that the institution 

enrolled too few of such students to so 

disclose or report with confidence and 

confidentiality. 

(ii) With respect to the requirement in 

paragraph (a)(6)(i) of this section to 

disaggregate the completion or 

graduation rate information by the 

receipt or nonreceipt of Federal student 

aid, students shall be considered to have 

received the aid in question only if they 

received such aid in the period 

specified in paragraph (a)(3) of this 

section. 

(iii) The requirement in paragraph 

(a)(6)(i) of this section shall not apply to 

two-year, degree-granting institutions of 

higher education until academic year 

2011–2012. 

(b) In calculating the completion or 

graduation rate under paragraph (a)(1) of 

this section, an institution must count 

as completed or graduated— 

(1) Students who have completed or 

graduated by the end of the 12-month 

period ending August 31 during which 

150 percent of the normal time for 

completion or graduation from their 

program has lapsed; and 

(2) Students who have completed a 

program described in § 668.8(b)(1)(ii), or 

an equivalent program, by the end of the 

12-month period ending August 31 

during which 150 percent of normal 

time for completion from that program 

has lapsed. 

(c) In calculating the transfer-out rate 

under paragraph (a)(2) of this section, an 

institution must count as transfers-out 

students who by the end of the 12- 

month period ending August 31 during 

which 150 percent of the normal time 

for completion or graduation from the 

program in which they were enrolled 

has lapsed, have not completed or 

graduated but have subsequently 

enrolled in any program of an eligible 

institution for which its program 

provided substantial preparation. 

(d) For the purpose of calculating a 

completion or graduation rate and a 

transfer-out rate, an institution may— 

(1) Exclude students who— 

(i) Have left school to serve in the 

Armed Forces; 

(ii) Have left school to serve on 

official church missions; 

(iii) Have left school to serve with a 

foreign aid service of the Federal 

Government, such as the Peace Corps; 

(iv) Are totally and permanently 

disabled; or 

(v) Are deceased. 

(2) In cases where the students 

described in paragraphs (d)(1)(i) through 

(iii) of this section represent 20 percent 

or more of the certificate- or degreeseeking, full-time, undergraduate 

students at the institution, recalculate 

the completion or graduation rates of 

those students by adding to the 150 

percent time-frame they normally have 

to complete or graduate, as described in 

paragraph (b) of this section, the time 

period the students were not enrolled 

due to their service in the Armed 


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Forces, on official church missions, or 

with a recognized foreign aid service of 

the Federal Government. 

(e)(1) The Secretary grants a waiver of 

the requirements of this section dealing 

with completion and graduation rate 

data to any institution that is a member 

of an athletic association or conference 

that has voluntarily published 

completion or graduation rate data, or 

has agreed to publish data, that the 

Secretary determines are substantially 

comparable to the data required by this 

section. 

(2) An institution that receives a 

waiver of the requirements of this 

section must still comply with the 

requirements of § 668.41(d)(3) and (f). 

(3) An institution, or athletic 

association or conference applying on 

behalf of an institution, that seeks a 

waiver under paragraph (e)(1) of this 

section must submit a written 

application to the Secretary that 

explains why it believes the data the 

athletic association or conference 

publishes are accurate and substantially 

comparable to the information required 

by this section. 

(f) In addition to calculating the 

completion or graduation rate required 

by paragraph (a)(1) of this section, an 

institution may, but is not required to— 

(1) Calculate a completion or 

graduation rate for students who 

transfer into the institution; 

(2) Calculate a completion or 

graduation rate for students described in 

paragraphs (d)(1)(i) through (iv) of this 

section; and 

(3) Calculate a transfer-out rate as 

specified in paragraph (c) of this 

section, if the institution determines 

that its mission does not include 

providing substantial preparation for its 

students to enroll in another eligible 

institution. 

(Approved by the Office of Management and 

Budget under control number 1845–0004) 

(Authority: 20 U.S.C. 1092) 

19. Section 668.46 is amended by: 

A. In paragraph (a), adding, in 

alphabetical order, a definition of test. 

B. In paragraph (b), adding paragraphs 

(13) and (14). 

C. Revising paragraph (c)(3). 

D. In paragraph (e), revising the 

paragraph heading and adding 

paragraph (e)(3). 

E. Adding paragraph (g). 

F. Adding paragraph (h). 

The additions and revisions read as 

follows: 

§ 668.46 Institutional security policies and 

crime statistics. 

(a) * * * 

Test: Regularly scheduled drills, 

exercises, and appropriate followthrough activities, designed for 

assessment and evaluation of emergency 

plans and capabilities. 

* * * * * 

(b) * * * 

(13) Beginning with the annual 

security report distributed by October 1, 

2010, a statement of policy regarding 

emergency response and evacuation 

procedures, as described in paragraph 

(g) of this section. 

(14) Beginning with the annual 

security report distributed by October 1, 

2010, a statement of policy regarding 

missing student notification procedures, 

as described in paragraph (h) of this 

section. 

(c) * * * 

(3) Reported crimes if a hate crime. 

An institution must report, by category 

of prejudice, the following crimes 

reported to local police agencies or to a 

campus security authority that manifest 

evidence that the victim was 

intentionally selected because of the 

victim’s actual or perceived race, 

gender, religion, sexual orientation, 

ethnicity, or disability: 

(i) Any crime it reports pursuant to 

paragraph (c)(1)(i) through (vii) of this 

section. 

(ii) The crimes of larceny-theft, simple 

assault, intimidation, and destruction/ 

damage/vandalism of property. 

(iii) Any other crime involving bodily 

injury. 

* * * * * 

(e) Timely warning and emergency 

notification. * * * 

(3) If there is an immediate threat to 

the health or safety of students or 

employees occurring on campus, as 

described in paragraph (g)(1) of this 

section, an institution must follow its 

emergency notification procedures. An 

institution that follows its emergency 

notification procedures is not required 

to issue a timely warning based on the 

same circumstances; however, the 

institution must provide adequate 

follow-up information to the community 

as needed. 

* * * * * 

(g) Emergency response and 

evacuation procedures. An institution 

must include a statement of policy 

regarding its emergency response and 

evacuation procedures in the annual 

security report. This statement must 

include— 

(1) The procedures the institution will 

use to immediately notify the campus 

community upon the confirmation of a 

significant emergency or dangerous 

situation involving an immediate threat 

to the health or safety of students or 

employees occurring on the campus; 

(2) A description of the process the 

institution will use to— 

(i) Confirm that there is a significant 

emergency or dangerous situation as 

described in paragraph (g)(1) of this 

section; 

(ii) Determine the appropriate 

segment or segments of the campus 

community to receive a notification; 

(iii) Determine the content of the 

notification; and 

(iv) Initiate the notification system; 

(3) A statement that the institution 

will, without delay, and taking into 

account the safety of the community, 

determine the content of the notification 

and initiate the notification system, 

unless issuing a notification will, in the 

professional judgment of responsible 

authorities, compromise efforts to assist 

a victim or to contain, respond to, or 

otherwise mitigate the emergency; 

(4) A list of the titles of the person or 

persons or organization or organizations 

responsible for carrying out the actions 

described in paragraph (g)(2) of this 

section; 

(5) The institution’s procedures for 

disseminating emergency information to 

the larger community; and 

(6) The institution’s procedures to test 

the emergency response and evacuation 

procedures on at least an annual basis, 

including— 

(i) Tests that may be announced or 

unannounced; 

(ii) Publicizing its emergency 

response and evacuation procedures in 

conjunction with at least one test per 

calendar year; and 

(iii) Documenting, for each test, a 

description of the exercise, the date, 

time, and whether it was announced or 

unannounced. 

(h) Missing student notification 

policies and procedures. (1) An 

institution that provides any on-campus 

student housing facility must include a 

statement of policy regarding missing 

student notification procedures for 

students who reside in on-campus 

student housing facilities in its annual 

security report. This statement must— 

(i) Indicate a list of titles of the 

persons or organizations to which 

students, employees, or other 

individuals should report that a student 

has been missing for 24 hours; 

(ii) Require that any missing student 

report must be referred immediately to 

the institution’s police or campus 

security department, or, in the absence 

of an institutional police or campus 

security department, to the local law 

enforcement agency that has jurisdiction 

in the area; 

(iii) Contain an option for each 

student living in an on-campus student 

housing facility to identify a contact 

person or persons whom the institution 

shall notify if the student is determined 


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missing by the institutional police or 

campus security department, or the 

local law enforcement agency; 

(iv) Advise students that their contact 

information will be registered 

confidentially, that this information will 

be accessible only to authorized campus 

officials, and that it may not be 

disclosed, except to law enforcement 

personnel in furtherance of a missing 

person investigation; 

(v) Advise students that if they are 

under 18 years of age and not 

emancipated, the institution must notify 

a custodial parent or guardian when the 

student is missing, in addition to any 

additional contact person designated by 

the student; and 

(vi) Advise students that, regardless of 

whether they name a contact person, 

unless the local law enforcement agency 

was the entity that made the 

determination that a student is missing, 

the institution will notify the local law 

enforcement agency that the student is 

missing. 

(2) The procedures that the institution 

must follow when a student who resides 

in an on-campus student housing 

facility is determined to have been 

missing for 24 hours include— 

(i) If the student has designated a 

contact person, notifying that contact 

person within 24 hours; 

(ii) If the student is under 18 years of 

age and is not emancipated, notifying 

the student’s custodial parent or 

guardian and any other designated 

contact person within 24 hours; and 

(iii) Regardless of whether the student 

has identified a contact person, is above 

the age of 18, or is an emancipated 

minor, informing the local law 

enforcement agency that has jurisdiction 

in the area that the student has been 

reported to be missing within 24 hours. 

* * * * * 

§ 668.48 [Amended] 

20. Section 668.48(b) is amended by 

removing the parenthetical ‘‘(d)’’ and 

adding, in its place, the parenthetical 

‘‘(e)’’. 

21. Section 668.49 is added to subpart 

D of part 668 to read as follows: 

§ 668.49 Institutional fire safety policies 

and fire statistics. 

(a) Additional definitions that apply 

to this section. 

Cause of fire: The factor or factors that 

give rise to a fire. The causal factor may 

be, but is not limited to, the result of an 

intentional or unintentional action, 

mechanical failure, or act of nature. 

Fire: Any instance of open flame or 

other burning in a place not intended to 

contain the burning or in an 

uncontrolled manner. 

Fire drill: A supervised practice of a 

mandatory evacuation of a building for 

a fire. 

Fire-related injury: Any instance in 

which a person is injured as a result of 

a fire, including an injury sustained 

from a natural or accidental cause, 

while involved in fire control, 

attempting rescue, or escaping from the 

dangers of the fire. The term ‘‘person’’ 

may include students, faculty, staff, 

visitors, firefighters, or any other 

individuals. 

Fire-related death: Any instance in 

which a person— 

(1) Is killed as a result of a fire, 

including death resulting from a natural 

or accidental cause while involved in 

fire control, attempting rescue, or 

escaping from the dangers of a fire; or 

(2) Dies within one year of injuries 

sustained as a result of the fire. 

Fire safety system: Any mechanism or 

system related to the detection of a fire, 

the warning resulting from a fire, or the 

control of a fire. This may include 

sprinkler systems or other fire 

extinguishing systems, fire detection 

devices, stand-alone smoke alarms, 

devices that alert one to the presence of 

a fire, such as horns, bells, or strobe 

lights; smoke-control and reduction 

mechanisms; and fire doors and walls 

that reduce the spread of a fire. 

Value of property damage: The 

estimated value of the loss of the 

structure and contents, in terms of the 

cost of replacement in like kind and 

quantity. This estimate should include 

contents damaged by fire, and related 

damages caused by smoke, water, and 

overhaul; however, it does not include 

indirect loss, such as business 

interruption. 

(b) Annual fire safety report. 

Beginning by October 1, 2010, an 

institution that maintains any oncampus student housing facility must 

prepare an annual fire safety report that 

contains, at a minimum, the following 

information: 

(1) The fire statistics described in 

paragraph (c) of this section. 

(2) A description of each on-campus 

student housing facility fire safety 

system. 

(3) The number of fire drills held 

during the previous calendar year. 

(4) The institution’s policies or rules 

on portable electrical appliances, 

smoking, and open flames in a student 

housing facility. 

(5) The institution’s procedures for 

student housing evacuation in the case 

of a fire. 

(6) The policies regarding fire safety 

education and training programs 

provided to the students, faculty, and 

staff. In these policies, the institution 

must describe the procedures that 

students and employees should follow 

in the case of a fire. 

(7) For purposes of including a fire in 

the statistics in the annual fire safety 

report, a list of the titles of each person 

or organization to which students and 

employees should report that a fire 

occurred. 

(8) Plans for future improvements in 

fire safety, if determined necessary by 

the institution. 

(c) Fire statistics. (1) An institution 

must report statistics for each oncampus student housing facility, for the 

three most recent calendar years for 

which data are available, concerning— 

(i) The number of fires and the cause 

of each fire; 

(ii) The number of injuries related to 

a fire that resulted in treatment at a 

medical facility, including at an oncampus health center; 

(iii) The number of deaths related to 

a fire; and 

(iv) The value of property damage 

caused by a fire. 

(2) An institution is required to 

submit a copy of the fire statistics in 

paragraph (c)(1) of this section to the 

Secretary on an annual basis. 

(d) Fire log. (1) An institution that 

maintains on-campus student housing 

facilities must maintain a written, easily 

understood fire log that records, by the 

date that the fire was reported, any fire 

that occurred in an on-campus student 

housing facility. This log must include 

the nature, date, time, and general 

location of each fire. 

(2) An institution must make an entry 

or an addition to an entry to the log 

within two business days, as defined 

under § 668.46(a), of the receipt of the 

information. 

(3) An institution must make the fire 

log for the most recent 60-day period 

open to public inspection during normal 

business hours. The institution must 

make any portion of the log older than 

60 days available within two business 

days of a request for public inspection. 

(4) An institution must make an 

annual report to the campus community 

on the fires recorded in the fire log. This 

requirement may be satisfied by the 

annual fire safety report described in 

paragraph (b) of this section. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW3) 

(Authority: 20 U.S.C. 1092) 

22. Appendix A to subpart D of part 

668 is amended by: 

A. Revising the introductory text. 

B. Under the heading, ‘‘Crime 

Definitions From the Uniform Crime 

Reporting Handbook,’’ revising and 


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renaming the definition of Weapon Law 

Violations, as Weapons: Carrying, 

Possessing, Etc. and revising the 

definitions of Drug Abuse Violations 

and Liquor Law Violations. 

C. Adding a heading at the end of the 

appendix, ‘‘Definitions From the Hate 

Crime Data Collection Guidelines of the 

Uniform Crime Reporting Handbook’’ 

followed by definitions for larceny-theft 

(except motor vehicle theft), simple 

assault, intimidation, and destruction/ 

damage/vandalism of property. 

The revisions and additions read as 

follows: 

Appendix A to Subpart D of Part 668— 

Crime Definitions in Accordance With 

the Federal Bureau of Investigation’s 

Uniform Crime Reporting Program 

The following definitions are to be used for 

reporting the crimes listed in § 668.46, in 

accordance with the Federal Bureau of 

Investigation’s Uniform Crime Reporting 

Program. The definitions for murder; robbery; 

aggravated assault; burglary; motor vehicle 

theft; weapons: carrying, possessing, etc.; law 

violations; drug abuse violations; and liquor 

law violations are excerpted from the 

Uniform Crime Reporting Handbook. The 

definitions of forcible rape and nonforcible 

sex offenses are excerpted from the National 

Incident-Based Reporting System Edition of 

the Uniform Crime Reporting Handbook. The 

definitions of larceny-theft (except motor 

vehicle theft), simple assault, intimidation, 

and destruction/damage/vandalism of 

property are excerpted from the Hate Crime 

Data Collection Guidelines of the Uniform 

Crime Reporting Handbook. 

* * * * * 

Crime Definitions From the Uniform Crime 

Reporting Handbook 

* * * * * 

Weapons: Carrying, Possessing, Etc. 

The violation of laws or ordinances 

prohibiting the manufacture, sale, purchase, 

transportation, possession, concealment, or 

use of firearms, cutting instruments, 

explosives, incendiary devices, or other 

deadly weapons. 

Drug Abuse Violations 

The violation of laws prohibiting the 

production, distribution, and/or use of 

certain controlled substances and the 

equipment or devices utilized in their 

preparation and/or use. The unlawful 

cultivation, manufacture, distribution, sale, 

purchase, use, possession, transportation, or 

importation of any controlled drug or 

narcotic substance. Arrests for violations of 

State and local laws, specifically those 

relating to the unlawful possession, sale, use, 

growing, manufacturing, and making of 

narcotic drugs. 

Liquor Law Violations 

The violation of State or local laws or 

ordinances prohibiting the manufacture, sale, 

purchase, transportation, possession, or use 

of alcoholic beverages, not including driving 

under the influence and drunkenness. 

* * * * * 

Definitions From the Hate Crime Data 

Collection Guidelines of the Uniform Crime 

Reporting Handbook 

Larceny-Theft (except motor vehicle theft) 

The unlawful taking, carrying, leading, or 

riding away of property from the possession 

or constructive possession of another. 

Attempted larcenies are included. 

Embezzlement, confidence games, forgery, 

worthless checks, etc., are excluded. 

Simple Assault 

An unlawful physical attack by one person 

upon another where neither the offender 

displays a weapon, nor the victim suffers 

obvious severe or aggravated bodily injury 

involving apparent broken bones, loss of 

teeth, possible internal injury, severe 

laceration, or loss of consciousness. 

Intimidation 

To unlawfully place another person in 

reasonable fear of bodily harm through the 

use of threatening words and/or other 

conduct, but without displaying a weapon or 

subjecting the victim to actual physical 

attack. 

Destruction/Damage/Vandalism of Property 

To willfully or maliciously destroy, 

damage, deface, or otherwise injure real or 

personal property without the consent of the 

owner or the person having custody or 

control of it. 

23. Section 668.161 is amended by: 

A. Revising the section heading. 

B. Revising paragraph (a)(4). 

The revisions read as follows: 

§ 668.161 Scope and purpose (cash 

management rules). 

(a) * * * 

(4) An institution must follow the 

disbursement procedures in 34 CFR 

675.16 for paying a student his or her 

wages under the FWS Program instead 

of the disbursement procedures in 

§§ 668.164(a), (b), and (d) through (g), 

and 668.165. 

* * * * * 

§ 668.184 [Amended] 

24. Section 668.184(a)(1) is amended 

by removing the word ‘‘If’’ and adding, 

in its place, the words ‘‘Except as 

provided under 34 CFR 600.32(d), if’’. 

25. Subpart O, consisting of 

§§ 668.230 through 668.233, is added to 

part 668 to read as follows: 

Subpart O—Financial Assistance for 

Students With Intellectual Disabilities 

Sec. 

668.230 Scope and purpose. 

668.231 Definitions. 

668.232 Program eligibility. 

668.233 Student eligibility. 

Subpart O—Financial Assistance for 

Students With Intellectual Disabilities 

§ 668.230 Scope and purpose. 

This subpart establishes regulations 

that apply to an institution that offers 

comprehensive transition and 

postsecondary programs to students 

with intellectual disabilities. Students 

enrolled in these programs are eligible 

for Federal financial assistance under 

the Federal Pell Grant, FSEOG, and 

FWS programs. Except for provisions 

related to needs analysis, the Secretary 

may waive any title IV, HEA program 

requirement related to the Federal Pell 

Grant, FSEOG, and FWS programs or 

institutional eligibility, to ensure that 

students with intellectual disabilities 

remain eligible for funds under these 

assistance programs. However, unless 

provided in this subpart or subsequently 

waived by the Secretary, students with 

intellectual disabilities and institutions 

that offer comprehensive transition and 

postsecondary programs are subject to 

the same regulations and procedures 

that otherwise apply to title IV, HEA 

program participants. 

(Authority: 20 U.S.C. 1091) 

§ 668.231 Definitions. 

The following definitions apply to 

this subpart: 

Comprehensive transition and 

postsecondary program means a degree, 

certificate, nondegree, or noncertificate 

program that— 

(1) Is offered by a participating 

institution; 

(2) Is delivered to students physically 

attending the institution; 

(3) Is designed to support students 

with intellectual disabilities who are 

seeking to continue academic, career 

and technical, and independent living 

instruction at an institution of higher 

education in order to prepare for gainful 

employment; 

(4) Includes an advising and 

curriculum structure; 

(5) Requires students with intellectual 

disabilities to have at least one-half of 

their participation in the program, as 

determined by the institution, focus on 

academic components through one or 

more of the following activities: 

(i) Taking credit-bearing courses with 

students without disabilities. 

(ii) Auditing or otherwise 

participating in courses with students 

without disabilities for which the 

student does not receive regular 

academic credit. 

(iii) Taking non-credit-bearing, 

nondegree courses with students 

without disabilities. 


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(iv) Participating in internships or 

work-based training in settings with 

individuals without disabilities; and 

(6) Provides students with intellectual 

disabilities opportunities to participate 

in coursework and other activities with 

students without disabilities. 

Student with an intellectual disability 

means a student— 

(1) With mental retardation or a 

cognitive impairment characterized by 

significant limitations in— 

(i) Intellectual and cognitive 

functioning; and 

(ii) Adaptive behavior as expressed in 

conceptual, social, and practical 

adaptive skills; and 

(2) Who is currently, or was formerly, 

eligible for special education and 

related services under the Individuals 

with Disabilities Education Act (IDEA) 

(20 U.S.C. 1401), including a student 

who was determined eligible for special 

education or related services under the 

IDEA but was home-schooled or 

attended private school. 

(Authority: 20 U.S.C. 1091, 1140) 

§ 668.232 Program eligibility. 

An institution that offers a 

comprehensive transition and 

postsecondary program must apply to 

the Secretary to have the program 

determined to be an eligible program. 

The institution applies under the 

provisions in 34 CFR 600.20 for adding 

an educational program, and must 

include in its application— 

(a) A detailed description of the 

comprehensive transition and 

postsecondary program that addresses 

all of the components of the program, as 

defined in § 668.231; 

(b) The institution’s policy for 

determining whether a student enrolled 

in the program is making satisfactory 

academic progress; 

(c) The number of weeks of 

instructional time and the number of 

semester or quarter credit hours or clock 

hours in the program, including the 

equivalent credit or clock hours 

associated with noncredit or reduced 

credit courses or activities; 

(d) A description of the educational 

credential offered (e.g., degree or 

certificate) or identified outcome or 

outcomes established by the institution 

for all students enrolled in the program; 

(e) A copy of the letter or notice sent 

to the institution’s accrediting agency 

informing the agency of its 

comprehensive transition and 

postsecondary program. The letter or 

notice must include a description of the 

items in paragraphs (a) through (d) of 

this section; and 

(f) Any other information the 

Secretary may require. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW4) 

(Authority: 20 U.S.C. 1091) 

§ 668.233 Student eligibility. 

A student with an intellectual 

disability is eligible to receive Federal 

Pell, FSEOG, and FWS program 

assistance under this subpart if— 

(a) The student satisfies the general 

student eligibility requirements under 

§ 668.32, except for the requirements in 

paragraphs (a), (e), and (f) of that 

section. With regard to these exceptions, 

a student— 

(1) Does not have to be enrolled for 

the purpose of obtaining a degree or 

certificate; 

(2) Is not required to have a high 

school diploma, a recognized equivalent 

of a high school diploma, or have 

passed an ability to benefit test; and 

(3) Is making satisfactory progress 

according to the institution’s published 

standards for students enrolled in its 

comprehensive transition and 

postsecondary programs; 

(b) The student is enrolled in a 

comprehensive transition and 

postsecondary program approved by the 

Secretary; and 

(c) The institution obtains a record 

from a local educational agency that the 

student is or was eligible for special 

education and related services under the 

IDEA. If that record does not identify 

the student as having an intellectual 

disability, as described in paragraph (1) 

of the definition of a student with an 

intellectual disability in § 668.231, the 

institution must also obtain 

documentation establishing that the 

student has an intellectual disability, 

such as— 

(1) A documented comprehensive and 

individualized psycho-educational 

evaluation and diagnosis of an 

intellectual disability by a psychologist 

or other qualified professional; or 

(2) A record of the disability from a 

local or State educational agency, or 

government agency, such as the Social 

Security Administration or a vocational 

rehabilitation agency, that identifies the 

intellectual disability. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW4) 

(Authority: 20 U.S.C. 1091) 

PART 675—FEDERAL WORK-STUDY 

PROGRAMS 

26. The authority citation for part 675 

is revised to read as follows: 

Authority: 3 20 U.S.C. 1070g, 1094; 42 

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

§ 675.2 [Amended] 

27. In § 675.2(b), paragraph (1) of the 

definition of community services is 

amended by adding the words 

‘‘emergency preparedness and 

response,’’ after the words ‘‘public 

safety,’’. 

28. Section 675.16 is revised to read 

as follow: 

§ 675.16 Payments to students. 

(a) General. (1) An institution must 

follow the disbursement procedures in 

this section for paying a student his or 

her wages under the FWS Program 

instead of the disbursement procedures 

in 34 CFR 668.164(a), (b), and (d) 

through (g), and 34 CFR 668.165. The 

institution must follow 34 CFR 

668.164(c) on making direct FWS 

payments to students and 34 CFR 

668.164(h) on handling the return of 

FWS funds that are not received or 

negotiated by a student. 

(2) An institution must pay a student 

FWS compensation at least once a 

month. 

(3) Before an institution makes an 

initial disbursement of FWS 

compensation to a student for an award 

period, the institution must notify the 

student of the amount of funds the 

student is authorized to earn, and how 

and when the FWS compensation will 

be paid. 

(4) Regardless of who employs the 

student, the institution is responsible 

for ensuring that the student is paid for 

work performed. 

(5) A student’s FWS compensation is 

earned when the student performs the 

work. 

(6) An institution may pay a student 

after the student’s last day of attendance 

for FWS compensation earned while he 

or she was in attendance at the 

institution. 

(7) A correspondence student must 

submit his or her first completed lesson 

before receiving a payment. 

(8) The institution may not obtain a 

student’s power of attorney to authorize 

any disbursement of funds without prior 

approval from the Secretary. 

(9) An institution makes a 

disbursement of FWS program funds on 

the date that the institution credits a 

student’s account at the institution or 

pays a student directly with— 

(i) Funds received from the Secretary; 

or 

(ii) Institutional funds used in 

advance of receiving FWS program 

funds. 

(b) Crediting a student’s account at 

the institution. (1) If the institution 

obtains the student’s authorization 

described in paragraph (d) of this 

section, the institution may use the FWS 


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funds to credit a student’s account at the 

institution to satisfy— 

(i) Current year charges for— 

(A) Tuition and fees; 

(B) Board, if the student contracts 

with the institution for board; 

(C) Room, if the student contracts 

with the institution for room; and 

(D) Other educationally related 

charges incurred by the student at the 

institution; and 

(ii) Prior award year charges with the 

restriction provided in paragraph (b)(2) 

of this section for a total of not more 

than $200 for— 

(A) Tuition and fees, room, or board; 

and 

(B) Other institutionally related 

charges incurred by the student at the 

institution. 

(2) If the institution is using FWS 

funds in combination with other title IV, 

HEA program funds to credit a student’s 

account at the institution to satisfy prior 

award year charges, a single $200 total 

prior award year charge limit applies to 

the use of all the title IV, HEA program 

funds for that purpose. 

(c) Credit balances. Whenever an 

institution disburses FWS funds by 

crediting a student’s account and the 

result is a credit balance, the institution 

must pay the credit balance directly to 

the student as soon as possible, but no 

later than 14 days after the credit 

balance occurs on the account. 

(d) Student authorizations. (1) Except 

for the noncash contributions allowed 

under paragraphs (e)(2) and (3) of this 

section, if an institution obtains written 

authorization from a student, the 

institution may— 

(i) Use the student’s FWS 

compensation to pay for charges 

described in paragraph (b) of this 

section that are included in that 

authorization; and 

(ii) Except if prohibited by the 

Secretary under the reimbursement or 

cash monitoring payment method, hold 

on behalf of the student any FWS 

compensation that would otherwise be 

paid directly to the student under 

paragraph (c) of this section. 

(2) In obtaining the student’s 

authorization to perform an activity 

described in paragraph (d)(1) of this 

section, an institution— 

(i) May not require or coerce the 

student to provide that authorization; 

(ii) Must allow the student to cancel 

or modify that authorization at any time; 

and 

(iii) Must clearly explain how it will 

carry out that activity. 

(3) A student may authorize an 

institution to carry out the activities 

described in paragraph (d)(1) of this 

section for the period during which the 

student is enrolled at the institution. 

(4)(i) If a student modifies an 

authorization, the modification takes 

effect on the date the institution 

receives the modification notice. 

(ii) If a student cancels an 

authorization to use his or her FWS 

compensation to pay for authorized 

charges under paragraph (b) of this 

section, the institution may use those 

funds to pay only those authorized 

charges incurred by the student before 

the institution received the notice. 

(iii) If a student cancels an 

authorization to hold his or her FWS 

compensation under paragraph (d)(1)(ii) 

of this section, the institution must pay 

those funds directly to the student as 

soon as possible, but no later than 14 

days after the institution receives that 

notice. 

(5) If an institution holds excess FWS 

compensation under paragraph (d)(1)(ii) 

of this section, the institution must— 

(i) Identify the amount of funds the 

institution holds for each student in a 

subsidiary ledger account designed for 

that purpose; 

(ii) Maintain, at all times, cash in its 

bank account in an amount at least 

equal to the amount of FWS 

compensation the institution holds for 

the student; and 

(iii) Notwithstanding any 

authorization obtained by the institution 

under this paragraph, pay any 

remaining balances by the end of the 

institution’s final FWS payroll period 

for an award year. 

(e)(1) Timing of institutional share 

and noncash contributions. Except for 

the noncash contributions allowed 

under paragraph (e)(2) or (3) of this 

section, an institution must pay the 

student its share of his or her FWS 

compensation at the same time it pays 

the Federal share. 

(2) If an institution pays a student its 

FWS share for an award period in the 

form of tuition, fees, services, or 

equipment, it must pay that share before 

the student’s final payroll period. 

(3) If an institution pays its FWS share 

in the form of prepaid tuition, fees, 

services, or equipment for a forthcoming 

academic period, it must give the 

student a statement before the close of 

his or her final payroll period listing the 

amount of tuition, fees, services, or 

equipment earned. 

(Authority: 20 U.S.C. 1091, 1094; 42 U.S.C. 

2753) 

29. Section 675.18 is amended by: 

A. Adding paragraph (g)(4). 

B. Adding paragraph (i). 

C. Revise the authority citation at the 

end of the section. 

The additions and revisions read as 

follows: 

§ 675.18 Use of funds. 

* * * * * 

(g) * * * 

(4)(i) In meeting the seven percent 

community service expenditure 

requirement in paragraph (g)(1) of this 

section, students may be employed to 

perform civic education and 

participation activities in projects that— 

(A) Teach civics in schools; 

(B) Raise awareness of government 

functions or resources; or 

(C) Increase civic participation. 

(ii) To the extent practicable, in 

providing civic education and 

participation activities under paragraph 

(g)(4)(i) of this section, an institution 

must— 

(A) Give priority to the employment 

of students in projects that educate or 

train the public about evacuation, 

emergency response, and injury 

prevention strategies relating to natural 

disasters, acts of terrorism, and other 

emergency situations; and 

(B) Ensure that the students receive 

appropriate training to carry out the 

educational services required. 

* * * * * 

(i) Flexibility in the event of a major 

disaster. (1) An institution located in 

any area affected by a major disaster 

may make FWS payments to disasteraffected students for the period of time 

(not to exceed the award period) in 

which the students were prevented from 

fulfilling their FWS obligations. The 

FWS payments— 

(i) May be made to disaster-affected 

students for an amount equal to or less 

than the amount of FWS wages the 

students would have been paid had the 

students been able to complete the work 

obligation necessary to receive the 

funds; 

(ii) May not be made to any student 

who was not eligible for FWS or was not 

completing the work obligation 

necessary to receive the funds, or had 

already separated from their 

employment prior to the occurrence of 

the major disaster; and 

(iii) Must meet the matching 

requirements of § 675.26, unless those 

requirements are waived by the 

Secretary. 

(2) The following definitions apply to 

this section: 

(i) Disaster-affected student means a 

student enrolled at an institution who— 

(A) Received an FWS award for the 

award period during which a major 

disaster occurred; 

(B) Earned FWS wages from an 

institution for that award period; 

(C) Was prevented from fulfilling his 

or her FWS obligation for all or part of 

the FWS award period because of the 

major disaster; and 


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(D) Was unable to be reassigned to 

another FWS job. 

(ii) Major disaster is defined in 

section 102(2) of the Robert T. Stafford 

Disaster Relief and Emergency 

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

(Authority: 20 U.S.C. 1095, 1096; 42 U.S.C. 

2753, 2755, 2756(b)) 

30. Section 675.26 is amended by: 

A. In paragraph (d)(2)(iii), removing 

the word ‘‘or’’ that appears after the 

punctuation ‘‘;’’. 

B. In paragraph (d)(2)(iv), removing 

the punctuation ‘‘.’’ and adding, in its 

place, the word ‘‘; or’’. 

C. Adding paragraph (d)(2)(v). 

The addition reads as follows: 

§ 675.26 FWS Federal share limitations. 

* * * * * 

(d) * * * 

(2) * * * 

(v) The student is employed in 

community service activities and is 

performing civic education and 

participation activities in a project as 

defined in § 675.18(g)(4). 

* * * * * 

31. Section 675.41 is amended by: 

A. Revising paragraph (a). 

B. Revising the paragraph heading 

and introductory text in paragraph (b). 

C. In paragraph (b)(2), removing the 

word ‘‘, participation,’’. 

D. In paragraph (b)(5), removing the 

words ‘‘work-learning’’ and adding, in 

their place, the words ‘‘work-learningservice’’. 

E. In paragraph (b)(6), removing the 

words ‘‘work-learning’’ and adding, in 

their place, the words ‘‘work-learningservice’’. 

The revisions read as follows: 

§ 675.41 Special definitions. 

* * * * * 

(a) Work-college: An eligible 

institution that— 

(1) Is a public or private nonprofit, 

four-year, degree-granting institution 

with a commitment to community 

service; 

(2) Has operated a comprehensive 

work-learning-service program for at 

least two years; 

(3) Requires resident students, 

including at least one-half of all 

students who are enrolled on a full-time 

basis, to participate in a comprehensive 

work-learning-service program for at 

least five hours each week, or at least 80 

hours during each period of enrollment, 

except summer school, unless the 

student is engaged in an institutionally 

organized or approved study abroad or 

externship program; and 

(4) Provides students participating in 

the comprehensive work-learningservice program with the opportunity to 

contribute to their education and to the 

welfare of the community as a whole. 

(b) Comprehensive student worklearning-service program: A student 

work-learning-service program that— 

* * * * * 

§ 675.43 [Amended] 

32. Section 675.43 is amended by 

removing the words ‘‘work-learning’’ 

and adding, in their place, the words 

‘‘work-learning-service’’. 

§ 675.44 [Amended] 

33. Section 675.44(b) is amended by 

removing the words ‘‘work-learning’’ 

and adding, in their place, the words 

‘‘work-learning-service’’. 

§ 675.45 [Amended] 

34. Section 675.45 is amended by: 

A. In paragraph (a)(1), in the 

introductory text of paragraph (a)(4), 

and in paragraph (a)(4)(i) removing the 

words ‘‘work-learning’’ and adding, in 

their place, the words ‘‘work-learningservice’’. 

B. In paragraph (a)(5), removing the 

words ‘‘work service learning’’ and 

adding, in their place, the words ‘‘worklearning-service’’. 

PART 686—TEACHER EDUCATION 

ASSISTANCE FOR COLLEGE AND 

HIGHER EDUCATION (TEACH) GRANT 

PROGRAM 

35. The authority citation for part 686 

continues to read as follows: 

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

otherwise noted. 

§ 686.12 [Amended] 

36. Section 686.12(c)(1) is amended 

by adding the words ‘‘, a suspension 

approved under § 686.41(a)(2), or a 

military discharge granted under 

§ 686.42(c)(2)’’ after the words ‘‘teaching 

service’’. 

37. Section 686.41 is amended by: 

A. In the introductory text of 

paragraph (a)(2), removing the words 

‘‘and (ii)’’ and adding, in their place, the 

words ‘‘, (ii), and (iii)’’. 

B. Revising paragraphs (a)(2)(ii), (b), 

and (c). 

C. Adding an OMB control number at 

the end of the section. 

The revisions and addition read as 

follows: 

§ 686.41 Periods of suspension. 

(a) * * * 

(2) * * * 

(ii) Does not exceed a total of three 

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

section. 

(b) A grant recipient, or his or her 

representative in the case of a grant 

recipient who qualifies under paragraph 

(a)(1)(iii) of this section, must apply for 

a suspension in writing on a form 

approved by the Secretary prior to being 

subject to any of the conditions under 

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

cause the TEACH Grant to convert to a 

Federal Direct Unsubsidized Loan. 

(c) A grant recipient, or his or her 

representative in the case of a grant 

recipient who qualifies under paragraph 

(a)(1)(iii) of this section, must provide 

the Secretary with documentation 

supporting the suspension request as 

well as current contact information 

including home address and telephone 

number. 

(Approved by the Office of Management and 

Budget under control number 1845–0083) 

* * * * * 

38. Section 686.42 is amended by: 

A. Adding paragraph (c). 

B. Adding an OMB control number at 

the end of the section. 

The additions read as follows: 

§ 686.42 Discharge of agreement to serve. 

* * * * * 

(c) Military discharge. (1) A grant 

recipient who has completed or who has 

otherwise ceased enrollment in a 

TEACH Grant-eligible program for 

which he or she received TEACH Grant 

funds and has exceeded the period of 

time allowed under § 686.41(a)(2)(ii), 

may qualify for a proportional discharge 

of his or her service obligation due to an 

extended call or order to active duty 

status. To apply for a military discharge, 

a grant recipient or his or her 

representative must submit a written 

request to the Secretary. 

(2) A grant recipient described in 

paragraph (c)(1) of this section may 

receive a— 

(i) One-year discharge of his or her 

service obligation if a call or order to 

active duty status is for more than three 

years; 

(ii) Two-year discharge of his or her 

service obligation if a call or order to 

active duty status is for more than four 

years; 

(iii) Three-year discharge of his or her 

service obligation if a call or order to 

active duty status is for more than five 

years; or 

(iv) Full discharge of his or her 

service obligation if a call or order to 

active duty status is for more than six 

years. 

(3) A grant recipient or his or her 

representative must provide the 

Secretary with— 

(i) A written statement from the grant 

recipient’s commanding or personnel 

officer certifying— 


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(A) That the grant recipient is on 

active duty in the Armed Forces of the 

United States; 

(B) The date on which the grant 

recipient’s service began; and 

(C) The date on which the grant 

recipient’s service is expected to end; or 

(ii)(A) A copy of the grant recipient’s 

official military orders; and 

(B) A copy of the grant recipient’s 

military identification. 

(4) For the purpose of this section, the 

Armed Forces means the Army, Navy, 

Air Force, Marine Corps, and the Coast 

Guard. 

(5) Based on a request for a military 

discharge from the grant recipient or his 

or her representative, the Secretary will 

notify the grant recipient or his or her 

representative of the outcome of the 

discharge request. For the portion on the 

service obligation that remains, the 

grant recipient remains responsible for 

fulfilling his or her service obligation in 

accordance with § 686.12. 

(Approved by the Office of Management and 

Budget under control number 1845–0083) 

* * * * * 

PART 690—FEDERAL PELL GRANT 

PROGRAM 

39. The authority citation for part 690 

continues to read as follows: 

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

otherwise noted. 

40. Section 690.63 is amended by: 

A. Adding paragraph (h). 

B. Adding an OMB control number 

and authority citation at the end of the 

section. 

The additions read as follows: 

§ 690.63 Calculation of a Federal Pell 

Grant for a payment period. 

* * * * * 

(h) Payment from two Scheduled 

Awards. (1) In a payment period, a 

student may receive a payment from the 

student’s first Scheduled Award in the 

award year and the student’s second 

Scheduled Award in the award year if— 

(i) The student is an eligible student 

who meets the provisions of § 690.67; 

and 

(ii) The student’s payment for the 

payment period is greater than the 

remaining balance of the first Scheduled 

Award. 

(2) The student’s payment for the 

payment period— 

(i) Is calculated based on the total 

credit or clock hours and weeks of 

instructional time in the payment 

period; and 

(ii) Is the remaining amount of the 

first Scheduled Award plus an amount 

from the second Scheduled Award for 

the balance of the payment for the 

payment period. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW5) 

(Authority: 20 U.S.C. 1070a) 

41. Section 690.64 is revised to read 

as follows: 

§ 690.64 Calculation of a Federal Pell 

Grant for a payment period which occurs in 

two award years. 

If a student enrolls in a payment 

period that is scheduled to occur in two 

award years— 

(a) The entire payment period must be 

considered to occur within one award 

year; 

(b)(1) Except as provided in paragraph 

(b)(2) of this section— 

(i) For a full-time or a three-quartertime student— 

(A) An institution must assign the 

payment period to the award year in 

which the student receives the greater 

payment for the payment period based 

on the information available at the time 

that the student’s Federal Pell Grant is 

initially calculated; and 

(B) If, subsequent to the initial 

calculation of the student’s payment for 

the payment period, the institution 

receives information that the student 

would receive a greater payment for the 

payment period by reassigning the 

payment to the other award year, the 

institution must reassign the payment to 

the award year providing the greater 

payment; and 

(ii) For a half-time or less-than-halftime student, an institution may assign 

the payment period to either award year 

if the student is enrolled for the 

payment period as a half-time or lessthan-half-time student; and 

(2) Upon request of a student, an 

institution must assign the payment 

period to the award year in which the 

student can be expected to receive a 

greater amount of Federal Pell Grants 

over the two award years in which the 

payment period is scheduled to occur; 

(c) Except as provided in paragraph 

(b)(1)(i) of this section, the institution 

shall place a payment period with more 

than six months scheduled to occur 

within one award year in that award 

year; 

(d) If an institution places the 

payment period in the first award year, 

it shall pay a student with funds from 

the first award year; and 

(e) If an institution places the 

payment period in the second award 

year, it shall pay a student with funds 

from the second award year. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW5) 

(Authority: 20 U.S.C. 1070a) 

42. Section 690.67 is revised to read 

as follows: 

§ 690.67 Receiving up to two Scheduled 

Awards during a single award year. 

(a) Eligibility. An institution shall 

award up to the full amount of a second 

Scheduled Award to a student in an 

award year if the student— 

(1) Has successfully completed the 

credit or clock hours of the first 

academic year in the award year; 

(2) Is enrolled in an eligible program 

leading to a bachelor’s or associate 

degree or other recognized educational 

credential except as provided in 34 CFR 

part 668, subpart O for students with 

intellectual disabilities; and 

(3) Is enrolled at least as a half-time 

student. 

(b) Transfer student. If a student 

transfers to an institution during an 

award year, the institution must— 

(1) Assume that a student has 

completed the credit or clock hours in 

the first academic year of the award year 

if the first Scheduled Award was 

disbursed at other institutions during 

the award year; or 

(2) If less than the first Scheduled 

Award has been disbursed at a prior 

institution that the student attended 

during the award year, the institution 

must determine the credit or clock 

hours the student is considered to have 

previously earned in the award year 

by— 

(i) Multiplying the amount of the 

student’s Scheduled Award disbursed at 

a prior institution during the award year 

by the number of credit or clock hours 

in the institution’s academic year and 

dividing the product of the 

multiplication by the amount of the 

Scheduled Award at the prior 

institution; and 

(ii) If the student previously attended 

more than one institution in the award 

year, adding the results of paragraph 

(b)(2)(i) of this section for each prior 

institution. 

(c) Special circumstances. (1) The 

financial aid administrator at a student’s 

institution may waive the requirement 

in paragraph (a)(1) of this section, if the 

financial aid administrator— 

(i) Determines that, in the period 

during which the first Scheduled Award 

was disbursed, the student was unable 

to complete the clock or credit hours in 

the student’s first academic year in the 

award year due to circumstances 

beyond the student’s control; and 

(ii) The determination is made and 

documented on an individual basis. 

(2) For purposes of paragraph (c)(1) of 

this section, circumstances beyond a 

student’s control— 

(i) May include, but are not limited to, 

the student withdrawing from classes 

due to illness or being unable to register 

for classes necessary to complete his or 


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her eligible program because those 

classes were not offered during that 

period; and 

(ii) Do not include, for example, 

withdrawing to avoid a particular grade 

or failing to register for a necessary class 

that was offered during the period to 

avoid a particular instructor. 

(d) Nonapplicable credit or clock 

hours. To determine the student’s 

eligibility for a second Scheduled 

Award in an award year, an institution 

may not use credit or clock hours that 

the student received based on Advanced 

Placement (AP) programs, International 

Baccalaureate (IB) programs, testing out, 

life experience, or similar competency 

measures. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW5) 

(Authority: 20 U.S.C. 1070a) 

43. Section 690.75 is amended by: 

A. Adding paragraph (e). 

B. Revising the OMB control number 

at the end of the section. 

The additions read as follows: 

§ 690.75 Determination of eligibility for 

payment. 

* * * * * 

(e) A student is considered to have an 

expected family contribution of zero if— 

(1) The student’s parent or guardian 

was a member of the Armed Forces of 

the United States and the parent or 

guardian died as a result of performing 

military service in Iraq or Afghanistan 

after September 11, 2001; and 

(2) At the time of the parent or 

guardian’s death the student— 

(i) Was under the age of 24; or 

(ii) Was enrolled at an institution of 

higher education. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW6) 

* * * * * 

PART 692—LEVERAGING 

EDUCATIONAL ASSISTANCE 

PARTNERSHIP PROGRAM 

44. The authority citation for part 692 

is revised to read as follows: 

Authority: 20 U.S.C. 1070c–1070c–4, 

unless otherwise noted. 

§ 692.10 [Amended] 

45. Section 692.10 is amended by: 

A. In paragraph (a)(1), adding the 

words ‘‘for the programs under this 

part’’ after the number ‘‘1979’’. 

B. In paragraph (a)(2), removing the 

word ‘‘If’’ and adding, in its place, the 

words ‘‘For the programs under this 

part, if’’. 

C. In paragraph (a)(2), removing the 

word ‘‘LEAP’’ each time it appears. 

D. In paragraph (b), removing the 

word ‘‘-appropriated’’ after the word 

State, both times it appears. 

E. In the authority citation at the end 

of the section, adding ‘‘, 1070c–2’’ after 

the number ‘‘1070c’’ 

46. Section 692.21 is amended by: 

A. In paragraph (c), removing the 

figure ‘‘$5,000’’ and adding, in its place, 

the words ‘‘the lesser of $12,500 or the 

student’s cost of attendance under 

section 472 of the HEA’’. 

B. In paragraph (j), removing the word 

‘‘and’’ that appears after the punctuation 

‘‘;’’. 

C. Redesignating paragraph (k) as 

paragraph (l). 

D. Adding a new paragraph (k). 

E. Adding an OMB control number at 

the end of the section. 

The additions read as follows: 

§ 692.21 What requirements must be met 

by a State program? 

* * * * * 

(k) Notifies eligible students that the 

grants are— 

(1) Leveraging Educational Assistance 

Partnership Grants; and 

(2) Funded by the Federal 

Government, the State, and, where 

applicable, other contributing partners; 

and 

* * * * * 

(Approved by the Office of Management and 

Budget under control number 1845–NEW7) 

* * * * * 

47. Section 692.70 is revised to read 

as follows: 

§ 692.70 How does the Secretary allot 

funds to the States? 

For fiscal year 2010–2011, the 

Secretary allots to each eligible State 

that applies for SLEAP funds an amount 

in accordance with the provisions in 

§ 692.10 prior to calculating allotments 

for States applying for GAP funds under 

subpart C of this part. 

(Authority: 20 U.S.C. 1070c–3a) 

48. Subpart C, consisting of §§ 692.90 

through 692.130, is added to part 692 to 

read as follows: 

Subpart C—Grants for Access and 

Persistence Program 

General 

Sec. 

692.90 What is the Grants for Access and 

Persistence Program? 

692.91 What other regulations apply to the 

GAP Program? 

692.92 What definitions apply to the GAP 

Program? 

692.93 Who is eligible to participate in the 

GAP Program? 

692.94 What requirements must a State 

satisfy, as the administrator of a 

partnership, to receive GAP Program 

funds? 

How Does a State Apply To Participate in 

GAP? 

692.100 What requirements must a State 

meet to receive an allotment under this 

program? 

692.101 What requirements must be met by 

a State partnership? 

What Is the Amount of Assistance and How 

May It Be Used? 

692.110 How does the Secretary allot funds 

to the States? 

692.111 For what purposes may a State use 

its payment under the GAP Program? 

692.112 May a State use the funds it 

receives from the GAP Program to pay 

administrative costs? 

692.113 What are the matching 

requirements for the GAP Program? 

How Does the Partnership Select Students 

Under the GAP Program? 

692.120 What are the requirements for 

student eligibility? 

How Does the Secretary Approve a Waiver 

of Program Requirements? 

692.130 How does a participating 

institution request a waiver of program 

requirements? 

Appendix A to Subpart C of Part 692— 

Grants for Access and Persistence Program 

(GAP) State Grant Allotment Case Study 

Subpart C—Grants for Access and 

Persistence Program 

General 

§ 692.90 What is the Grants for Access 

and Persistence Program? 

The Grants for Access and Persistence 

(GAP) Program assists States in 

establishing partnerships to provide 

eligible students with LEAP Grants 

under GAP to attend institutions of 

higher education and to encourage 

increased participation in early 

information and intervention, 

mentoring, or outreach programs. 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.91 What other regulations apply to 

the GAP Program? 

The regulations listed in § 692.3 also 

apply to the GAP Program. 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.92 What definitions apply to the GAP 

Program? 

The definitions listed in § 692.4 also 

apply to the GAP Program. 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.93 Who is eligible to participate in 

the GAP Program? 

(a) States. States that meet the 

requirements in §§ 692.94 and 692.100 

are eligible to receive payments under 

the GAP Program. 

(b) Degree-granting institutions of 

higher education. Degree-granting 


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institutions of higher education that 

meet the requirements in § 692.101 are 

eligible to participate in a partnership 

under the GAP Program. 

(c) Early information and 

intervention, mentoring, or outreach 

programs. Early information and 

intervention, mentoring, or outreach 

programs that meet the requirements in 

§ 692.101 are eligible to participate in a 

partnership under the GAP Program. 

(d) Philanthropic organizations or 

private corporations. Philanthropic 

organizations or private corporations 

that meet the requirements in § 692.101 

are eligible to participate in a 

partnership under the GAP Program. 

(e) Students. Students who meet the 

requirements of § 692.120 are eligible to 

receive assistance or services from a 

partnership under the GAP Program. 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.94 What requirements must a State 

satisfy, as the administrator of a 

partnership, to receive GAP Program 

funds? 

To receive GAP Program funds for any 

fiscal year— 

(a) A State must— 

(1) Participate in the LEAP Program; 

(2) Establish a State partnership 

with— 

(i) At least— 

(A) One public degree-granting 

institution of higher education that is 

located in the State; and 

(B) One private degree-granting 

institution of higher education, if at 

least one exists in the State that may be 

eligible to participate in the State’s 

LEAP Program under subpart A of this 

part; 

(ii) New or existing early information 

and intervention, mentoring, or 

outreach programs located in the State; 

and 

(iii) At least one philanthropic 

organization located in, or that provides 

funding in, the State, or private 

corporation located in, or that does 

business in, the State; 

(3) Meet the requirements in 

§ 692.100; and 

(4) Have a program under this subpart 

that satisfies the requirements in 

§ 692.21(a), (e), (f), (g), and (j). 

(b) A State may provide an early 

information and intervention, 

mentoring, or outreach program under 

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

(Authority: 20 U.S.C. 1070c–3a) 

How Does a State Apply To Participate 

in GAP? 

§ 692.100 What requirements must a State 

meet to receive an allotment under this 

program? 

For a State to receive an allotment 

under the GAP Program, the State 

agency that administers the State’s 

LEAP Program under subpart A of this 

part must— 

(a) Submit an application on behalf of 

a partnership in accordance with the 

provisions in § 692.20 at such time, in 

such manner, and containing such 

information as the Secretary may 

require including— 

(1) A description of— 

(i) The State’s plan for using the 

Federal funds allotted under this 

subpart and the non-Federal matching 

funds; and 

(ii) The methods by which matching 

funds will be paid; 

(2) An assurance that the State will 

provide matching funds in accordance 

with § 692.113; 

(3) An assurance that the State will 

use Federal GAP funds to supplement, 

and not supplant, Federal and State 

funds available for carrying out the 

activities under Title IV of the HEA; 

(4) An assurance that early 

information and intervention, 

mentoring, or outreach programs exist 

within the State or that there is a plan 

to make these programs widely 

available; 

(5) A description of the organizational 

structure that the State has in place to 

administer the program, including a 

description of how the State will 

compile information on degree 

completion of students receiving grants 

under this subpart; 

(6) A description of the steps the State 

will take to ensure, to the extent 

practicable, that students who receive a 

LEAP Grant under GAP persist to degree 

completion; 

(7) An assurance that the State has a 

method in place, such as acceptance of 

the automatic zero expected family 

contribution under section 479(c) of the 

HEA, to identify eligible students and 

award LEAP Grants under GAP to such 

students; 

(8) An assurance that the State will 

provide notification to eligible students 

that grants under this subpart are LEAP 

Grants and are funded by the Federal 

Government and the State, and, where 

applicable, other contributing partners. 

(b) Serve as the primary 

administrative unit for the partnership; 

(c) Provide or coordinate non-Federal 

share funds, and coordinate activities 

among partners; 

(d) Encourage each institution of 

higher education in the State that 

participates in the State’s LEAP Program 

under subpart A of this part to 

participate in the partnership; 

(e) Make determinations and early 

notifications of assistance; 

(f) Ensure that the non-Federal funds 

used as matching funds represent 

dollars that are in excess of the total 

dollars that a State spent for need-based 

grants, scholarships, and work-study 

assistance for fiscal year 1999, including 

the State funds reported for the 

programs under this part; 

(g) Provide an assurance that, for the 

fiscal year prior to the fiscal year for 

which the State is requesting Federal 

funds, the amount the State expended 

from non-Federal sources per student, 

or the aggregate amount the State 

expended, for all the authorized 

activities in § 692.111 will be no less 

than the amount the State expended 

from non-Federal sources per student, 

or in the aggregate, for those activities 

for the second fiscal year prior to the 

fiscal year for which the State is 

requesting Federal funds; and 

(h) Provide for reports to the Secretary 

that are necessary to carry out the 

Secretary’s functions under the GAP 

Program. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW7) 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.101 What requirements must be met 

by a State partnership? 

(a) State. A State that is receiving an 

allotment under this subpart must meet 

the requirements under §§ 692.94 and 

692.100. 

(b) Degree-granting institution of 

higher education. A degree-granting 

institution of higher education that is in 

a partnership under this subpart— 

(1) Must participate in the State’s 

LEAP Program under subpart A of this 

part; 

(2) Must recruit and admit 

participating eligible students and 

provide additional institutional grant 

aid to participating students as agreed to 

with the State agency; 

(3) Must provide support services to 

students who receive LEAP Grants 

under GAP and are enrolled at the 

institution; 

(4) Must assist the State in the 

identification of eligible students and 

the dissemination of early notifications 

of assistance as agreed to with the State 

agency; and 

(5) May provide funding or services 

for early information and intervention, 

mentoring, or outreach programs. 

(c) Early information and 

intervention, mentoring, or outreach 

program. An early information and 


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intervention, mentoring, or outreach 

program that is in a partnership under 

this subpart shall provide direct 

services, support, and information to 

participating students. 

(d) Philanthropic organization or 

private corporation. A philanthropic 

organization or private corporation in a 

partnership under this subpart shall 

provide non-Federal funds for LEAP 

Grants under GAP for participating 

students or provide funds or support for 

early information and intervention, 

mentoring, or outreach programs. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW7) 

(Authority: 20 U.S.C. 1070c–3a) 

What Is the Amount of Assistance and 

How May It Be Used? 

§ 692.110 How does the Secretary allot 

funds to the States? 

(a)(1) The Secretary allots to each 

State participating in the GAP Program 

an amount of the funds available for the 

GAP Program based on the ratio used to 

allot the State’s Federal LEAP funds 

under § 692.10(a). 

(2) If a State meets the requirements 

of § 692.113(b) for a fiscal year, the 

number of students under § 692.10(a) for 

the State is increased to 125 percent in 

determining the ratio in paragraph (a) of 

this section for that fiscal year. 

(3) Notwithstanding paragraph (a)(1) 

and (2) of this section— 

(i) If the Federal GAP funds available 

from the appropriation for a fiscal year 

are sufficient to allot to each State that 

participated in the prior year the same 

amount of Federal GAP funds allotted in 

the prior fiscal year, but are not 

sufficient both to allot the same amount 

of Federal GAP funds allotted in the 

prior fiscal year to these States and also 

to allot additional funds to additional 

States in accordance with the ratio used 

to allot the States’ Federal LEAP funds 

under § 692.10(a), the Secretary allots— 

(A) To each State that participated in 

the prior year, the amount the State 

received in the prior year; and 

(B) To each State that did not 

participate in the prior year, an amount 

of Federal GAP funds available to States 

based on the ratio used to allot the 

State’s Federal LEAP funds under 

§ 692.10(a); and 

(ii) If the Federal GAP funds available 

from the appropriation for a fiscal year 

are not sufficient to allot to each State 

that participated in the prior year at 

least the amount of Federal GAP funds 

allotted in the prior fiscal year, the 

Secretary allots to each State an amount 

which bears the same ratio to the 

amount of Federal GAP funds available 

as the amount of Federal GAP funds 

allotted to each State in the prior fiscal 

year bears to the amount of Federal GAP 

funds allotted to all States in the prior 

fiscal year. 

(b) The Secretary allots funds 

available for reallotment in a fiscal year 

in accordance with the provisions of 

paragraph (a) of this section used to 

calculate initial allotments for the fiscal 

year. 

(c) Any funds made available for the 

program under this subpart but not 

expended may be allotted or reallotted 

for the program under subpart A of this 

part. 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.111 For what purposes may a State 

use its payment under the GAP Program? 

(a) Establishment of a partnership. 

Each State receiving an allotment under 

this subpart shall use the funds to 

establish a partnership to award grants 

to eligible students in order to increase 

the amount of financial assistance 

students receive under this subpart for 

undergraduate education expenses. 

(b) Amount of LEAP Grants under 

GAP. (1) The amount of a LEAP Grant 

under GAP by a State to an eligible 

student shall be not less than— 

(i) The average undergraduate in-State 

tuition and mandatory fees for full-time 

students at the public institutions of 

higher education in the State where the 

student resides that are the same type of 

institution that the student attends 

(four-year degree-granting, two-year 

degree-granting, or non-degreegranting); minus 

(ii) Other Federal and State aid the 

student receives. 

(2) The Secretary determines the 

average undergraduate in-State tuition 

and mandatory fees for full-time 

students at public institutions in a State 

weighted by enrollment using the most 

recent data reported by institutions in 

the State to the Integrated Postsecondary 

Education Data System (IPEDS) 

administered by the National Center for 

Educational Statistics. 

(c) Institutional participation. (1) A 

State receiving an allotment under this 

subpart may restrict the use of LEAP 

Grants under GAP only to students 

attending institutions of higher 

education that are participating in the 

partnership. 

(2) If a State provides LEAP Grants 

under subpart A of this part to students 

attending institutions of higher 

education located in another State, 

LEAP Grants under GAP may be used at 

institutions of higher education located 

in another State. 

(d) Early notification to potentially 

eligible students. (1) Each State 

receiving an allotment under this 

subpart shall annually notify potentially 

eligible students in grades 7 through 12 

in the State, and their families, of their 

potential eligibility for student financial 

assistance, including a LEAP Grant 

under GAP, to attend a LEAPparticipating institution of higher 

education. 

(2) The notice shall include— 

(i) Information about early 

information and intervention, 

mentoring, or outreach programs 

available to the student; 

(ii) Information that a student’s 

eligibility for a LEAP Grant under GAP 

is enhanced through participation in an 

early information and intervention, 

mentoring, or outreach program; 

(iii) An explanation that student and 

family eligibility for, and participation 

in, other Federal means-tested programs 

may indicate eligibility for a LEAP 

Grant under GAP and other student aid 

programs; 

(iv) A nonbinding estimate of the total 

amount of financial aid that an eligible 

student with a similar income level may 

expect to receive, including an estimate 

of the amount of a LEAP Grant under 

GAP and an estimate of the amount of 

grants, loans, and all other available 

types of aid from the major Federal and 

State financial aid programs; 

(v) An explanation that in order to be 

eligible for a LEAP Grant under GAP, at 

a minimum, a student shall— 

(A) Meet the eligibility requirements 

under § 692.120; and 

(B) Enroll at a LEAP-participating 

institution of higher education in the 

State of the student’s residence or an 

out-of-State institution if the State elects 

to make LEAP Grants under GAP for 

attendance at out-of-State institutions in 

accordance with paragraph (c)(2) of this 

section; 

(vi) Any additional requirements that 

the State may require for receipt of a 

LEAP Grant under GAP in accordance 

with § 692.120(a)(4); and 

(vii) An explanation that a student is 

required to file a Free Application for 

Federal Student Aid to determine his or 

her eligibility for Federal and State 

financial assistance and may include a 

provision that eligibility for an award is 

subject to change based on— 

(A) A determination of the student’s 

financial eligibility at the time of the 

student’s enrollment at a LEAPparticipating institution of higher 

education or an out-of-State institution 

in accordance with paragraph (c)(2) of 

this section; 

(B) Annual Federal and State 

spending for higher education; and 

(C) Other aid received by the student 

at the time of the student’s enrollment 

at the institution of higher education. 


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(e) Award notification. (1) Once a 

student, including a student who has 

received early notification under 

paragraph (d) of this section, applies for 

admission to an institution that is a 

partner in the partnership of the State of 

the student’s residence, files a Free 

Application for Federal Student Aid and 

any related State form, and is 

determined eligible by the State, the 

State shall— 

(i) Issue the student a preliminary 

award certificate for a LEAP Grant 

under GAP with estimated award 

amounts; and 

(ii) Inform the student that the 

payment of the grant is subject to 

certification of enrollment and 

eligibility by the institution. 

(2) If a student enrolls in an 

institution that is not a partner in the 

partnership of the student’s State of 

residence but the State has not restricted 

eligibility to students enrolling in 

partner institutions, including, if 

applicable, out-of-State institutions, the 

State shall, to the extent practicable, 

follow the procedures of paragraph 

(e)(1) of this section. 

(Approved by the Office of Management and 

Budget under control number 1845–NEW7) 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.112 May a State use the funds it 

receives from the GAP Program to pay 

administrative costs? 

(a) A State that receives an allotment 

under this subpart may reserve not more 

than two percent of the funds made 

available annually for State 

administrative functions required for 

administering the partnership and other 

program activities. 

(b) A State must use not less than 

ninety-eight (98) percent of an allotment 

under this subpart to make LEAP Grants 

under GAP. 

(Authority: 20 U.S.C. 1070c–3a) 

§ 692.113 What are the matching 

requirements for the GAP Program? 

(a) The matching funds of a 

partnership— 

(1) Shall be funds used for making 

LEAP Grants to eligible students under 

this subpart; 

(2) May be— 

(i) Cash; or 

(ii) A noncash, in-kind contribution 

that— 

(A) Is fairly evaluated; 

(B) Has monetary value, such as a 

tuition waiver or provision of room and 

board, or transportation; 

(C) Helps a student meet the cost of 

attendance at an institution of higher 

education; and 

(D) Is considered to be estimated 

financial assistance under 34 CFR part 

673.5(c); and 

(3) May be funds from the State, 

institutions of higher education, or 

philanthropic organizations or private 

corporations that are used to make 

LEAP Grants under GAP. 

(b) The non-Federal match of the 

Federal allotment shall be— 

(1) Forty-three percent of the 

expenditures under this subpart if a 

State applies for a GAP allotment in 

partnership with— 

(i) Any number of degree-granting 

institutions of higher education in the 

State whose combined full-time 

enrollment represents less than a 

majority of all students attending 

institutions of higher education in the 

State as determined by the Secretary 

using the most recently available data 

from IPEDS; and 

(ii) One or both of the following— 

(A) Philanthropic organizations that 

are located in, or that provide funding 

in, the State; or 

(B) Private corporations that are 

located in, or that do business in, the 

State; and 

(2) Thirty-three and thirty-four onehundredths percent of the expenditures 

under this subpart if a State applies for 

a GAP allotment in partnership with— 

(i) Any number of degree-granting 

institutions of higher education in the 

State whose combined full-time 

enrollment represents a majority of all 

students attending institutions of higher 

education in the State as determined by 

the Secretary using the most recently 

available data from IPEDS; and 

(ii) One or both of the following— 

(A) Philanthropic organizations that 

are located in, or that provide funding 

in, the State; or 

(B) Private corporations that are 

located in, or that do business in, the 

State. 

(c) Nothing in this part shall be 

interpreted as limiting a State or other 

member of a partnership from 

expending funds to support the 

activities of a partnership under this 

subpart that are in addition to the funds 

matching the Federal allotment. 

(Authority: 20 U.S.C. 1070c–3a) 

How Does the Partnership Select 

Students under the GAP Program? 

§ 692.120 What are the requirements for 

student eligibility? 

(a) Eligibility. A student is eligible to 

receive a LEAP Grant under GAP if the 

student— 

(1) Meets the relevant eligibility 

requirements contained in 34 CFR 

668.32; 

(2) Has graduated from secondary 

school or, for a home-schooled student, 

has completed a secondary education; 

(3)(i) Has received, or is receiving, a 

LEAP Grant under GAP for each year 

the student remains eligible for 

assistance under this subpart; or 

(ii) Meets at least two of the following 

criteria— 

(A) As designated by the State, either 

has an EFC equal to zero, as determined 

under part F of the HEA, or a 

comparable alternative based on the 

State’s approved criteria for the LEAP 

Program under subpart A of this part; 

(B) Qualifies for the State’s maximum 

undergraduate award for LEAP Grants 

under subpart A of this part in the 

award year in which the student is 

receiving an additional LEAP Grant 

under GAP; or 

(C) Is participating in, or has 

participated in, a Federal, State, 

institutional, or community early 

information and intervention, 

mentoring, or outreach program, as 

determined by the State agency 

administering the programs under this 

part; and 

(4) Any additional requirements that 

the State may require for receipt of a 

LEAP Grant under GAP. 

(b) Priority. In awarding LEAP Grants 

under GAP, a State shall give priority to 

students meeting all the criteria in 

paragraph (a)(3)(i) of this section. 

(c) Duration of eligibility. (1) A 

student may receive a LEAP Grant 

under GAP if the student continues to 

demonstrate that he or she is financially 

eligible by meeting the provisions of 

paragraph (a)(3)(ii)(A) or (B) of this 

section. 

(2) A State may impose reasonable 

time limits to degree completion. 

(Authority: 20 U.S.C. 1070c–3a) 

How Does the Secretary Approve a 

Waiver of Program Requirements? 

§ 692.130 How does a participating 

institution request a waiver of program 

requirements? 

(a) The Secretary may grant, upon the 

request of an institution participating in 

a partnership that meets the 

requirements of § 692.113(b)(2), a 

waiver for the institution from statutory 

or regulatory requirements that inhibit 

the ability of the institution to 

successfully and efficiently participate 

in the activities of the partnership. 

(b) An institution must submit a 

request for a waiver through the State 

agency administering the partnership. 

(c) The State agency must forward to 

the Secretary, in a timely manner, the 

request made by the institution and may 

include any additional information or 


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recommendations that it deems appropriate for the Secretary’s 

consideration. 

(Authority: 20 U.S.C. 1070c–3a) 

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[FR Doc. E9–18550 Filed 8–20–09; 8:45 am] 

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