24756 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations

DEPARTMENT OF EDUCATION

34 CFR Part 694

RIN 1840–AC82

Gaining Early Awareness and

Readiness for Undergraduate

Programs

AGENCY: Office of Postsecondary

Education, Education.

ACTION: Final regulations.

SUMMARY: The Secretary amends the

regulations governing the Gaining Early

Awareness and Readiness for

Undergraduate Programs (GEAR UP)

program. These amendments are needed

because the current regulations applied

only to the fiscal year 1999 competition.

These final regulations apply to any

future GEAR UP competitions. The

proposed regulations were drafted

subject to the negotiated rulemaking

process required by section 492 of the

Higher Education Act of 1965, as

amended (HEA).

DATES: These regulations are effective

May 30, 2000.

FOR FURTHER INFORMATION CONTACT:

Rafael Ramirez, U.S. Department of

Education, 1990 K Street, NW., room

6107, Washington, DC 20006.

Telephone: (202) 502–7676. If you use a

telecommunications device for the deaf

(TDD), you may call the Federal

Information Relay Service (FIRS) at 1–

800–877–8339.

Individuals with disabilities may

obtain this document in an alternate

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

audiotape, or computer diskette) on

request to the contact person listed in

the preceding paragraph.

SUPPLEMENTARY INFORMATION: On

December 21, 1999, the Secretary

published a notice of proposed

rulemaking (NPRM) for this program in

the Federal Register (64 FR 71552).

There are several significant differences

in the final regulations.

Analysis of Comments and Changes

In response to the Secretary’s

invitation in the NPRM, 171 parties

submitted comments on the proposed

regulations. Virtually all of these letters

expressed support for the GEAR UP

program. An analysis of the comments

and of the changes in the regulations

follows.

We discuss substantive issues under

the sections of the regulations to which

they pertain. Generally, we do not

address technical and other minor

changes and suggested changes the law

does not authorize the Secretary to

make.

Students Served Under the Cohort

Approach (§ 694.2)

Comment: One commenter believed

that following individual students from

year to year through different middle or

high schools and to different States

would be impractical, unfeasible, and

costly. Another commenter believed

that the regulations should provide a

definition of what it means to serve a

student in a cohort and what records

must document that services have been

provided.

Discussion: Section 404B(g)(1)(B)

requires that Partnerships ensure that

services continue to be provided to

students in a cohort through the twelfth

grade. Section 694.4 of the regulations

(which extends this provision to States)

addresses which students a GEAR UP

program must continue to serve when a

single middle school feeds into more

than one high school. A GEAR UP

program is required to continue to

provide services to only those students

in the cohort who, after completing the

last grade level offered by the school,

attend participating schools that enroll

a substantial majority of the students of

the cohort. Under the regulations,

therefore, the GEAR UP program would

only have to follow the students from

the initial cohort who attend subsequent

participating schools that enroll a

substantial majority of the students from

the initial cohort. The GEAR UP

program could follow and provide

services to students who attend high

schools that enroll less than a

substantial majority of the students from

the initial cohort, but would not be

required to do so.

In addition, the proposed regulations

would not require a State or Partnership

to follow individual students to

different States. As explained in the

preamble to the NPRM, GEAR UP

programs are not required to serve

students who begin in the cohort but

leave the participating school before

completing the last grade level offered

by the school. Once a student leaves the

participating school before completing

the last grade level offered by the

school, the GEAR UP program would no

longer be required to follow that

student.

Evaluating the success of the program

depends upon following as many

students from the initial cohort as

possible. The regulations as published

in the NPRM would allow the maximum

number of students from the initial

cohort to receive services, without

placing an undue burden on

Partnerships or States.

With respect to a definition of what it

means to serve students in a cohort and

what records are required to document

that the students have been served, we

don’t believe that information is

necessary in the regulations. Applicants

are evaluated based on selection criteria

found in 34 CFR 75.210 of the

Education General Administrative

Regulations (EDGAR). Applicants tell

the Department, based on the selection

criteria, what services and resources the

program will provide the students in the

cohort and how they intend to measure

the impact of these services and

resources. By not regulating the specific

services that must be provided, we

allow maximum flexibility to the States

and Partnerships to develop innovative

ways to serve students.

Similarly, we believe that it would be

too limiting to specify all forms of

acceptable documentation in the

regulations. Partnerships and States

must be able to document that they are

providing the services in their project

plans. However, because the services

provided will vary from program to

program, appropriate documentation

will also vary. This approach is

consistent with the Department’s

philosophy on regulating only when

necessary.

Changes: None.

Requirements for the Cohort (§ 694.3)

Comments: Two commenters felt that

the regulatory language defining the

cohort was unduly restrictive and

inconsistent with the statute.

Discussion: The statute requires that

Partnerships provide GEAR UP services

to at least one grade level of students,

beginning not later than 7th grade, in a

participating school that has a 7th grade

and in which at least 50 percent of the

students enrolled are eligible for free or

reduced price lunch. As explained in

the NPRM, the intent of GEAR UP

Partnerships is to emphasize the

importance of providing services and

resources to meet the needs of a cohort

of low-income students beginning in the

middle grades (i.e., schools that include

a 7th grade), and continuing to support

those students through high school. The

regulatory language follows both the

purpose and language of the statute.

Changes: None.

Matching Requirements (§ 694.7)

Comments: Two commenters felt that

the reduced matching requirement

available to the institutions eligible

under the regulations was inadequate.

The commenters also suggested that the

fact that contributions could be in-kind

wouldn’t help the most needy

institutions, because it would still

require the institution to find additional

funds to maintain its instruction

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations 24757

program. The commenters suggested

completely eliminating the matching

requirement for all institutions that

qualify for Part B of Title III.

One commenter also felt that the

Department should eliminate the

requirement that the Partnership

include only local educational agencies

(LEA) in which at least 50 percent of the

students enrolled are eligible for free or

reduced-price lunch under the National

School Lunch Act.

Discussion: As explained in the

preamble to the NPRM, the success of

the GEAR UP program depends, at least

in part, on a strong community

partnership. Additionally, as the

preamble explained, the poorest and

very rural communities were able to

meet the match in the 1999 competition,

suggesting that eliminating the match

entirely was unnecessary. Therefore, the

negotiating committee, in developing

the proposed regulations, felt strongly

that a complete waiver of the matching

requirement, even for a subset of

applicants, was unacceptable.

We also feel that the concern that the

neediest institutions would not be able

to provide an in-kind match, because

they would need to hire new staff, isn’t

accurate. An institution would not be

required to use its faculty or staff to

provide the in-kind match. Partnerships

must include at least two community

organizations or entities. The in-kind

match could be met by using qualified

community or student volunteers, at no

additional cost to the institution, so that

time and effort could be counted as

much, or more, than institutional

resources. The in-kind match could also

be met through contributions from

partners such as non-profit

organizations, large and small

businesses, service groups, religious

organizations, and State and local

governments.

The Department also believes that the

requirement that a Partnership include

only LEAs in which at least 50 percent

of the students enrolled are eligible for

free or reduced-price lunch is extremely

important, and negotiators on the

committee to develop the proposed

regulations agreed. The negotiating

committee felt that those Partnerships

that include only the most needy school

districts should be eligible for a reduced

match. Without the requirement, there

could be cases in which Partnerships

that included wealthier LEAs could

receive the benefit of a reduced match,

simply by partnering with an institution

of higher education that was eligible for

the reduced match. This would allow

less needy Partnerships to take

advantage of a reduced match. The

matching requirement as written allows

us to maximize the effects of the

program, by encouraging strong

community support to ensure that the

benefits of the program continue even

after the grant has ended.

Changes: None.

Indirect Costs (§ 694.9)

Comments: None.

Discussion: We have determined that

the language drafted for the proposed

regulations, though accurate, is not as

clear as it could be. We have therefore

decided to make minor technical

changes to the language. The change

does not alter the substance of the

regulation, and the language now

reflects the language from the Education

General Administrative Regulations

(EDGAR) provision on which it was

based, § 75.562 on indirect costs for

educational training grants.

Changes: We have revised the

language to reflect § 75.562 of EDGAR,

the provision on which it was based.

Amount of Scholarship (§ 694.10(a)(2))

Comments: One commenter expressed

concern that the regulations would

require the State or Partnership to

reduce the scholarship amount

proportionally for any student who

receives a GEAR UP scholarship and

attends on a less than full-time basis.

Discussion: The State or Partnership

would not be required to reduce the

scholarship proportionally. The

proposed regulations provide that the

State or Partnership may reduce the

scholarship for students who attend

part-time. The regulation further

specifies that if the State or Partnership

chooses to reduce the scholarship, then

such a reduction cannot be greater than

the percentage reduction in tuition and

fees charged to that student as a result

of attending part-time. This does not

require proportional reductions, but

merely provides a limit on the

maximum reduction in the GEAR UP

scholarship. A State or Partnership

could choose to reduce the GEAR UP

scholarship by an amount that is less

than the percentage reduction in tuition

and fees.

Changes: None.

Continuation Scholarships (§ 694.10(c))

Comments: One commenter suggested

that the regulations should include

discretion for the Secretary to waive the

requirement that States and

Partnerships provide continuation

scholarships to students who remain

eligible when there are insufficient

Federal funds.

Discussion: The preamble to the

NPRM clarified that, if Federal funding

were discontinued during the life of the

grant, grantees would not be required to

continue to provide their share of the

funds. The same policy would apply if

Federal funds were reduced and

projects were not fully funded as a

result. If Federal funds were reduced,

grantees could also reduce an equivalent

amount of non-federal funds. A waiver

process would be unnecessary. A

grantee could only be required to

provide full continuation scholarships

during the life of the grant for all

students who remain eligible if Federal

funding remained the same. However,

as the preamble to the NPRM explained,

as long as some level of Federal funding

is provided throughout the life of the

grant, a grantee is obligated to provide

continuation scholarships to students

who remain eligible for scholarships

even after the grant period has ended.

Changes: None.

General Scholarship and Disclosure

Requirements (§ 694.11)

Comments: Although several

commenters supported the NPRM

unchanged, most of the comments from

institutions of higher education

repeated some or all of the following

points: (1) States and Partnerships, not

the Department, should monitor

scholarship procedures. Departmental

enforcement would be an unacceptable

intrusion by the Federal government

into the internal process by which

institutions distribute institutional aid;

(2) the proposed disclosure of financial

aid packaging would be a burden on

institutions and potentially inconsistent

with existing regulations on disclosure

for institutions; (3) the statutory

‘‘supplement-not-supplant’’ provision

should not apply to individual student

aid packaging, and should apply to

States and Partnerships at the program

level; (4) it is inappropriate for the

Department to establish requirements

for student aid packaging; (5)

institutions wouldn’t always be able to

identify which students were GEAR UP

recipients, making compliance difficult,

with no clear direction for how the

Department would monitor compliance;

(6) the regulations would apply to all

institutions, not just those participating

in GEAR UP; and (7) GEAR UP students

should not receive preferential

treatment over non-GEAR UP students,

as could be the case if the restrictions

on financial aid packaging in the

proposed regulations were retained.

Discussion: After reviewing the

comments we received and upon further

consideration, we have modified the aid

packaging requirements and eliminated

the disclosure requirements as

published in § 694.11 of the NPRM. The

negotiating committee developed

24758 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations

requirements that would have allowed

an institution to deviate from certain

student financial aid packaging rules,

including specific overaward

procedures. The proposed packaging

provisions and the accompanying

proposed disclosure provisions for the

packaging of student financial aid have

been removed in the final rule. In

addition, under the final regulations,

institutional monitoring of GEAR UP

scholarship awards will rest with States

and Partnerships, and not the

Department.

We address more specifically each of

the points reiterated by the vast majority

of the commenters, each under its own

heading.

1. Departmental Enforcement

The GEAR UP statute dealing with

scholarships closely resembles its

predecessor, the National Early

Intervention Scholarship and

Partnership (NEISP) program statute, in

which enforcement for ensuring

institutional compliance with the

program requirements was placed with

State recipients. The GEAR UP statute

was modified from NEISP to include

Partnerships as eligible entities. In light

of the comments regarding

Departmental enforcement, States and

Partnerships, not the Department, will

monitor the treatment of GEAR UP

scholarships in relation to other aid, as

was the case under both NEISP and the

1999 GEAR UP regulations. The

treatment of GEAR UP scholarships

under the final regulations, therefore, is

the same as the treatment of NEISP

scholarships in relation to other aid

under the NEISP program, and for GEAR

UP scholarships under the fiscal year

1999 GEAR UP regulations. In addition,

we expect that States and Partnerships

will ensure that institutions, in the case

of an overaward, will reduce aid in the

reverse order of how it was granted.

2. Disclosure, Burden, and

Inconsistency

As mentioned previously, most

commenters believed that the disclosure

requirements would place an extensive

burden on institutions. Additionally,

commenters believed that the disclosure

requirements were inconsistent with

other disclosure requirements for Title

IV aid.

The disclosure requirements in the

proposed regulations are not part of the

final regulations. Individual student

financial aid packaging is dealt with in

the final regulations by returning to the

financial aid ordering language that

appeared in both the 1994 NEISP and

1999 GEAR UP regulations. The only

difference from the 1999 GEAR UP

regulations is that exceptions to

financial aid ordering requirements,

suggested by the negotiators in

developing the NPRM, are retained in

the final regulations in order to

recognize exceptional circumstances

that cannot be handled by a general

packaging regulation. States and

Partnerships must ensure that

institutions document the exceptional

circumstances related to the GEAR UP

student that are unique to that student.

They will also ensure that institutions

document and maintain in the GEAR UP

student’s file the modification made to

the GEAR UP student’s award package

and the reason for the modification.

Finally, States and Partnerships will

ensure that institutions provide written

notice to the GEAR UP student of the

reason for and the specific modification

that was made to the package. We

believe that these requirements are

consistent with other Title IV

regulations and do not believe that they

are overly burdensome for either States

and Partnerships or to institutions. The

institution would only have to

document cases of exceptional

circumstances. Finally, institutions

would only be required to disclose their

policies to a State or Partnership that

requests it. Commenters were most

concerned with the burden of disclosing

their policy to the Department and

prospective students. The final

regulations therefore eliminate the

burden that concerned so many

commenters.

3. Supplement-Not-Supplant

Several commenters believed that the

proposed regulations implied that States

and Partnerships were exempt from the

statutory requirement that GEAR UP

funds ‘‘supplement and not supplant

funds expended for existing programs’’.

States and Partnerships are both subject

to the statutory ‘‘supplement not

supplant’’ requirement and to the

assurance required in GEAR UP plan

submissions. In drafting the regulations,

the negotiating committee adhered to

the Department’s principles for

regulating, and therefore regulated only

when necessary. For the most part, we

did not repeat statutory language in the

regulations. That does not mean that a

statutory requirement not in the

regulations does not apply. If State or

Partnership recipients do supplant, their

awards will be subject to cancellation or

re-negotiation, or repayment after an

audit finding.

Other commenters did not believe

that the supplement-not-supplant

provision was intended to apply to

individual student aid packages. The

intent of the GEAR UP program is to

benefit individual GEAR UP students.

Therefore, we believe that individual

GEAR UP students must benefit through

their individual financial aid packages.

The legislative intent is clear that the

GEAR UP scholarship is not intended to

replace other gift aid but is in addition

to any other aid the student would have

received.

4. Inappropriate Establishment of

Packaging Requirements

The preamble to the NPRM said the

Federal Government had a long history

of placing maintenance of effort,

supplement not supplant, and similar

restrictions on institutional aid as a

condition of receiving federal funds.

This statement is correct. Many major

federal student aid programs have had

such requirements at one time or

another in their history, including Pell

Grants and campus-based programs.

Additionally, it should be noted that the

NPRM preamble was written to give

context to readers of the regulation

negotiations. We believe the preamble is

faithful both to history and to the

statements in the negotiations.

5. Identification of GEAR UP Students

By eliminating the disclosure

requirements, institutions will not be

required to identify GEAR UP students

in order to comply with any disclosure

requirements. Under the final

regulations, States and Partnerships

must monitor the ordering of how aid is

packaged. One commenter

recommended that we require States to

develop systems to provide data to

students and institutions on the

eligibility of GEAR UP awards in a

timely manner. It is the State or

Partnership’s responsibility to inform

the institution in a timely manner that

the student is a GEAR UP student. The

Department feels it is not necessary to

specify the actual process in the

regulations.

6. Applicability of the Regulations to All

Institutions

Again, because the disclosure

requirements are not part of the final

regulations, the regulations do not apply

to all institutions. The final regulations

apply to the responsibility of the States

and Partnerships, not to the institution.

If, however, in the absence of

exceptional circumstances, an

institution chooses not to follow the

ordering outlined in the regulations,

then the State or Partnership, acting

consistent with their responsibilities

under this regulation, must not provide

the GEAR UP scholarship.

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7. Preferential Treatment of GEAR UP

Students

We believe it is important that the

final regulations reflect the legislative

history and intent of the GEAR UP

program. GEAR UP was designed to

provide early intervention services and

programs to students in middle schools

and high schools and, where

scholarships are offered, to link the

scholarships specifically to those

students in amounts that will

significantly reduce what they have to

pay for college. GEAR UP scholarships

are designed to permit these students to

attend college without the fear of

incurring significant debt. Because the

intent of the GEAR UP program is to

benefit GEAR UP students, in some

cases, this will mean that they receive

preferential treatment over other nonGEAR UP students.

Further, the GEAR UP program was

designed to encourage contributions

from partners such as non-profit

organizations, large and small

businesses, service groups, religious

organizations, and State and local

governments. These partners must not

be discouraged from contributing funds

out of concern that institutions will

simply reduce their own institutional

aid to the student, and therefore the

GEAR UP students will not benefit from

the scholarships. Additionally, we are obligated under

the Government Performance and

Results Act (GPRA) to evaluate program

performance for Congress. The term

used by several commenters,

‘‘preferential treatment,’’ is essentially

the same as targeting. If funds targeted

by Congress to certain populations are

redistributed to other populations

(which would be the real effect of a

revised package that ‘‘released’’ other

gift aid when a GEAR UP scholarship

was added), there will be no way to

effectively evaluate the effects of the

program on the target population.

Additional Comments on § 694.11

In addition to the comments already

discussed with respect to § 694.11 of the

proposed regulations, we also received

several other comments on the

disclosure requirements that are

discussed later in this preamble.

However, because all of the comments

refer to changes to § 694.11 of the

proposed regulations, the changes

appear at the end of all of the comments

on this section.

GEAR UP and Less Needy Students

Comments: One commenter suggested

that not all the students served by GEAR

UP will be needy, since for

Partnerships, a cohort of students must

be from a school in which at least 50

percent of the students enrolled are

eligible for free and reduced-price

lunch, which could mean that some

students could come from less needy

families. Since those students would

also receive GEAR UP scholarships, the

commenter argues funding will have to

be taken from other need-based

programs that serve truly needy

students.

Discussion: We do not believe that the

regulations would require an institution

to take funding from needy students to

give to a less needy GEAR UP student.

While GEAR UP early intervention

services must be provided to all

students in a cohort or students that a

State has selected as priority students,

not all GEAR UP students are

guaranteed a scholarship, as the

commenter suggested. We believe that if

a GEAR UP student is from a less needy

family and therefore not in need of a

scholarship, the State or Partnerships

may choose not to provide that student

with a scholarship. Under § 694.10(b), a

State or Partnership must first award a

GEAR UP scholarship to students who

are eligible to receive a Pell Grant.

Students eligible for a Pell Grant are

needy students. If, after all the students

who participated in the GEAR UP

program who are eligible for a Pell Grant

are given scholarships, a State or

Partnership still has scholarship money

available, the State or Partnership may

give scholarships to other GEAR UP

students, taking into consideration the

students’ need. Under the regulations

therefore, it seems unlikely that less

needy students would receive

scholarships that would take funding

away from needier students.

Redistribution of Aid

Comments: Commenters noted that

students who receive GEAR UP

scholarships earn the funds. The

commenters stated that these students

must know that the fruits of their labors

will truly benefit them by reducing their

higher education costs. The commenters

felt that institutions should not be free,

in effect, to redistribute those dollars to

other students. The commenters

believed that this line of thinking is at

odds with the statute. The commenters

asserted that, if the final regulations do

not prevent this practice, then the

preferences that are to be given to

Partnership applications that include

scholarships should be eliminated. Discussion: We believe that the final

regulations contain sufficient

protections against redistribution. States

and Partnerships are required under the

regulations to ensure that institutions

package their aid in accordance with the

order specified in the regulations. We

believe that the ordering specified

provides sufficient protection against

redistribution. Consequently, we do not

plan to eliminate the competitive

preference for Partnerships that include

a scholarship component in their

application.

Students’ Knowledge of Institutions’

GEAR UP Policies

Comments: One commenter suggested

that students who have a GEAR UP

scholarship should know how that

scholarship will be treated with respect

to other aid in the packaging of student

financial assistance.

Discussion: In accordance with

§ 694.10(e), States and Partnerships

must ensure that institutions follow the

ordering outlined by the regulations

when GEAR UP scholarships are

involved. States and Partnerships would

inform GEAR UP students of any

institution that does not intend to treat

the GEAR UP scholarship as required,

so that students can decide whether to

attend a different institution, or give up

the scholarship.

Aid Already Disbursed v. Aid Not Yet

Disbursed

Comments: One commenter suggested

that the regulations detailing the order

in which aid is packaged should be

modified to distinguish aid already

disbursed from aid not yet disbursed,

since in overaward situations, the

institution might have to seek a return

of a disbursed loan.

Discussion: We don’t think that such

a distinction is necessary in the

regulations. Since loans are part of the

financial assistance that is awarded last

under the regulations, students should

not be in a situation in which loans

caused them to exceed their cost of

attendance. Therefore the recovery of

disbursed loans is unlikely.

Supplement-Not-Supplant and Early

Intervention

Comments: One commenter believed

that the statutory supplement-notsupplant language should apply only to

early awareness programs of a similar

nature and shouldn’t restrict the rights

of individual institutions in awarding

their own aid to individual students.

Discussion: We disagree that the

supplement-not-supplant language

applies only to early awareness

programs. The existing programs

referred to in the statute include State

and institutional aid programs as well as

early intervention programs. If

supplement-not-supplant referred only

to early intervention programs similar in

nature, States could cut their current

24760 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations

student aid programs. That

interpretation would be contrary to

statutory intent.

Changes: We have revised § 694.11 to

reflect the 1999 regulation, with the

addition of a provision for exceptional

circumstances.

Cost of Attendance (§ 694.11(a)(2))

Comments: Two commenters

suggested that, in determining a

student’s financial aid package, the

regulation should state that the total

assistance provided under Title IV

should not exceed the student’s unmet

need, not the student’s cost of

attendance. The commenters suggested

that this would conform the GEAR UP

regulation to other Title IV regulations.

Discussion: Some Title IV regulations

specify cost of attendance and some

unmet need, depending on the

underlying statute. In this case, cost of

attendance is specified in the statute

(section 404E(c)), allowing GEAR UP

funds to be used to replace expected

family contribution (EFC). This will

permit GEAR UP students to carry a

reduced loan burden where otherwise

they may have been forced to borrow to

meet their EFC.

Changes: None.

Master Calendar

Comments: Two commenters noted

that even though the GEAR UP

regulations were subject to the

negotiated rulemaking process, they will

be published in final form past the

November 1 deadline for regulations

subject to the Master Calendar

provisions in the law. The commenters

questioned whether or not these

regulations can take effect before July 1,

2001.

Discussion: The Master Calendar

provisions in section 482 of the Higher

Education Act (HEA) apply only to the

student financial assistance programs.

While the Congress has amended

section 482 several times to clarify that

the scope of the provisions is sweeping

with regard to those programs, it has not

expanded the scope to encompass the

discretionary grant programs in Title IV

of the HEA. The paragraph establishing

a regulatory deadline of ‘‘November 1

prior to the start of the award year’’

makes clear in particular that the

deadline could not apply to the

discretionary grant programs, which

unlike the student financial assistance

programs do not operate on an ‘‘award

year’’ basis. In contrast, the statute

prescribing negotiated rulemaking,

section 492 of the HEA, clearly applies

to all Title IV programs.

Changes: None.

Mandatory Priority (§ 694.15)

Comments: None.

Discussion: While the statutory

provisions reflected in § 694.15, as

proposed in the NPRM, are still

applicable, we do not believe that as a

practical matter the priority will arise,

since States eligible for the priority have

received Gear Up grants.

Changes: Section 694.15, as proposed

in the NPRM, has been removed.

Executive Order 12866

We have reviewed these final

regulations in accordance with

Executive Order 12866. Under the terms

of the order we have assessed the

potential costs and benefits of this

regulatory action.

The potential costs associated with

the final regulations are those we have

determined to be necessary for

administering this program effectively

and efficiently.

In assessing the potential costs and

benefits—both quantitative and

qualitative—of these final regulations,

we have determined that the benefits of

the regulations justify the costs.

We also have determined that this

regulatory action does not unduly

interfere with State, local, and tribal

governments in the exercise of their

governmental functions.

We discussed the potential costs and

benefits of these final regulations in the

preamble to the NPRM under the

following headings: Executive Order

12866; Summary of Potential Costs and

Benefits (64 FR 71560–71561).

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The Paperwork Reduction Act of 1995

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collection of information unless it

displays a valid OMB control number.

We display the valid OMB control

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the end of the affected section of the

regulations.

Intergovernmental Review

This program is subject to the

requirements of Executive Order 12372

and the regulations in 34 CFR Part 79.

The objective of the Executive Order is

to foster an intergovernmental

partnership and a strengthened

federalism by relying on processes

developed by State and local

governments for coordination and

review of proposed Federal financial

assistance.

In accordance with the order, we

intend this document to provide early

notification of the Department’s specific

plans and actions for this program.

Assessment of Educational Impact

In the NPRM we requested comments

on whether the proposed regulations

would require transmission of

information that any other agency or

authority of the United States gathers or

makes available.

Based on the response to the NPRM

and on our review, we have determined

that these final regulations do not

require transmission of information that

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United States gathers or makes

available.

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You may view this document, as well

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rulemaking

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(Catalog of Federal Domestic Assistance

Number does not apply.)

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

List of Subjects in 34 CFR Part 694

Colleges and universities, Elementary

and secondary education, Grant

programs—education, Reporting and

recordkeeping requirements, Student

aid.

Dated: April 6, 2000.

A. Lee Frischler,

Assistant Secretary, Office of Postsecondary

Education.

For the reasons discussed in the

preamble, the Secretary amends title 34

of the Code of Federal Regulations by

revising part 694 to read as follows:

PART 694—GAINING EARLY

AWARENESS AND READINESS FOR

UNDERGRADUATE PROGRAMS

(GEAR UP)

Sec.

694.1 What is the maximum amount that

the Secretary may award each fiscal year

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations 24761

to a Partnership or a State under this

program?

694.2 Which students must a Partnership,

or a State that chooses to use the cohort

approach in its project, serve under the

program’s early intervention component?

694.3 What are the requirements for a

cohort?

694.4 Which students must a State or

Partnership serve when there are

changes in the cohort?

694.5 What requirements must be met by a

Partnership or State that chooses to

provide services to private school

students under the program’s early

intervention component?

694.6 Who may provide GEAR UP services

to students attending private schools?

694.7 What are the matching requirements

for a GEAR UP Partnership?

694.8 What are the requirements that a

Partnership must meet in designating a

fiscal agent for its project under this

program?

694.9 What is the maximum indirect cost

rate for an agency of a State or local

government?

694.10 What are the requirements for

awards under the program’s scholarship

component under section 404E of the

HEA?

694.11 Under what conditions may a

Partnership that does not participate in

the GEAR UP scholarship component

under section 404E of the HEA provide

financial assistance for postsecondary

education to students under the GEAR

UP early intervention component?

694.12 How does a State determine which

State agency will apply for, and

administer, a State grant under this

program?

694.13 What requirements must be met by

a Partnership or State participating in

GEAR UP with respect to 21st Century

Scholarship Certificates?

694.14 What requirements apply to a State

that served students under the National

Early Intervention Scholarship and

Partnership program (NEISP) and that

receives a GEAR UP grant?

694.15 What priorities may the Secretary

establish for a GEAR UP grant?

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

28.

§ 694.1 What is the maximum amount that

the Secretary may award each fiscal year to

a Partnership or a State under this

program?

(a) Partnership grants. The maximum

amount that the Secretary may award

each fiscal year for a GEAR UP

Partnership grant is calculated by

multiplying—

(1) $800; by

(2) The number of students the

Partnership proposes to serve that year,

as stated in the Partnership’s plan.

(b) State grants. The Secretary

establishes the maximum amount that

may be awarded each fiscal year for a

GEAR UP State grant in a notice

published in the Federal Register.

(Authority: 20 U.S.C. 1070a–23)

§ 694.2 Which students must a

Partnership, or a State that chooses to use

the cohort approach in its project, serve

under the program’s early intervention

component?

A Partnership, or a State that chooses

to use a cohort approach in its GEAR UP

early intervention component, must,

except as provided in § 694.4—

(a) Provide services to at least one

entire grade level (cohort) of students

(subject to § 694.3(b)) beginning not

later than the 7th grade;

(b) Ensure that supplemental

appropriate services are targeted to the

students with the greatest needs; and

(c) Ensure that services are provided

through the 12th grade to those

students.

(Authority: 20 U.S.C. 1070a–22)

§ 694.3 What are the requirements for a

cohort?

(a) In general. Each cohort to be

served by a Partnership or State must be

from a participating school—

(1) That has a 7th grade; and

(2) In which at least 50 percent of the

students are eligible for free or reducedprice lunch under the National School

Lunch Act; or

(b) Public housing exception. If the

Partnership or State determines it would

promote program effectiveness, a cohort

may consist of all of the students in a

particular grade level at one or more

participating schools who reside in

public housing, as defined in section

3(b)(1) of the United States Housing Act

of 1937.

(Authority: 20 U.S.C. 1070a–22)

§ 694.4 Which students must a State or

Partnership serve when there are changes

in the cohort?

(a) At the school where the cohort

began. A Partnership or State must

serve, as part of the cohort, any

additional students who—

(1) Are at the grade level of the

students in the cohort; and

(2) Begin attending the participating

school at which the cohort began to

receive GEAR UP services.

(b) At a subsequent participating

school. If not all of the students in the

cohort attend the same school after the

cohort completes the last grade level

offered by the school at which the

cohort began to receive GEAR UP

services, a Partnership or a State—

(1) May continue to provide GEAR UP

services to all students in the cohort;

and

(2) Must continue to provide GEAR

UP services to at least those students in

the cohort that attend participating

schools that enroll a substantial majority

of the students in the cohort.

(Authority: 20 U.S.C. 1070–a22)

§ 694.5 What requirements must be met by

a Partnership or State that chooses to

provide services to private school students

under the program’s early intervention

component?

(a) Secular, neutral, and

nonideological services or benefits.

Educational services or other benefits,

including materials and equipment,

provided under GEAR UP by a

Partnership or State that chooses to

provide those services or benefits to

students attending private schools, must

be secular, neutral, and nonideological.

(b) Control of funds. In the case of a

Partnership or State that chooses to

provide services under GEAR UP to

students attending private schools, the

fiscal agent (in the case of a Partnership)

or a State agency (in the case of a State)

must—

(1) Control the funds used to provide

services under GEAR UP to those

students;

(2) Hold title to materials, equipment,

and property purchased with GEAR UP

funds for GEAR UP program uses and

purposes related to those students; and

(3) Administer those GEAR UP funds

and property.

(Authority: 20 U.S.C. 1070a–21 to 1070a–28)

§ 694.6 Who may provide GEAR UP

services to students attending private

schools?

(a) GEAR UP services to students

attending private schools must be

provided—

(1) By employees of a public agency;

or

(2) Through contract by the public

agency with an individual, association,

agency, or organization.

(b) In providing GEAR UP services to

students attending private schools, the

employee, individual, association,

agency, or organization must be

independent of the private school that

the students attend, and of any religious

organization affiliated with the school,

and that employment or contract must

be under the control and supervision of

the public agency.

(c) Federal funds used to provide

GEAR UP services to students attending

private schools may not be commingled

with non-Federal funds.

(Authority: 1070a–21 to 1070a–28)

§ 694.7 What are the matching

requirements for a GEAR UP Partnership?

(a) In general. A Partnership must—

(1) State in its application the

percentage of the cost of the GEAR UP

24762 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations

project the Partnership will provide for

each year from non-Federal funds,

subject to the requirements in paragraph

(b) of this section; and

(2) Comply with the matching

percentage stated in its application for

each year of the project period.

(b) Matching requirements.

(1) Except as provided in paragraph

(b)(2) of this section, the non-Federal

share of the cost of the GEAR UP project

must be not less than 50 percent of the

total cost over the project period.

(2) A Partnership that has three or

fewer institutions of higher education as

members may provide less than 50

percent, but not less than 30 percent, of

the total cost over the project period if

it includes—

(i) A fiscal agent that is eligible to

receive funds under Title V, or Part B

of Title III, or section 316 or 317 of the

HEA, or a local educational agency;

(ii) Only participating schools with a

7th grade in which at least 75 percent

of the students are eligible for free or

reduced-price lunch under the National

School Lunch Act; and

(iii) Only local educational agencies

in which at least 50 percent of the

students enrolled are eligible for free or

reduced-price lunch under the National

School Lunch Act.

(3) The non-Federal share of the cost

of a GEAR UP project may be provided

in cash or in-kind.

(Authority: 20 U.S.C. 1070a–23)

§ 694.8 What are the requirements that a

Partnership must meet in designating a

fiscal agent for its project under this

program?

Although any member of a

Partnership may organize the project, a

Partnership must designate as the fiscal

agent for its project under GEAR UP—

(a) A local educational agency; or

(b) An institution of higher education

that is not pervasively sectarian.

(Authority: 20 U.S.C. 1070a–22)

§ 694.9 What is the maximum indirect cost

rate for an agency of a State or local

government?

Notwithstanding 34 CFR 75.560–

75.562 and 34 CFR 80.22, the maximum

indirect cost rate that an agency of a

State or local government receiving

funds under GEAR UP may use to

charge indirect costs to these funds is

the lesser of—

(a) The rate established by the

negotiated indirect cost agreement; or

(b) Eight percent of a modified total

direct cost base.

(Authority: 20 U.S.C. 1070a–21 to 1070a–28)

§ 694.10 What are the requirements for

awards under the program’s scholarship

component under section 404E of the HEA?

(a) Amount of scholarship. (1) Except

as provided in paragraph (a)(2) of this

section, the amount of a scholarship

awarded under section 404E of the HEA

must be at least the lesser of—

(i) 75 percent of the average cost of

attendance, as determined under section

472 of the HEA, for in-State students in

4-year programs of instruction at public

institutions of higher education in the

State; or

(ii) The maximum Federal Pell Grant

award funded for the award year in

which the scholarship will be awarded.

(2) If a student who is awarded a

GEAR UP scholarship attends an

institution on a less than full-time basis

during any award year, the State or

Partnership awarding the GEAR UP

scholarship may reduce the scholarship

amount, but in no case shall the

percentage reduction in the scholarship

be greater than the percentage reduction

in tuition and fees charged to that

student.

(b) Pell Grant recipient priority. A

State, or a Partnership that chooses to

participate in the scholarship

component under section 404E of the

HEA in its GEAR UP project—

(1) Must award GEAR UP

scholarships first to students who will

receive, or are eligible to receive, a

Federal Pell Grant during the award

year in which the GEAR UP scholarship

is being awarded and who are eligible

for a GEAR UP scholarship under the

eligibility requirements in section

404E(d) of the HEA; and

(2) May, if GEAR UP scholarship

funds remain after awarding

scholarships to students under

paragraph (b)(1) of this section, award

GEAR UP scholarships to other eligible

students (who will not receive a Federal

Pell Grant) after considering the need of

those students for GEAR UP

scholarships.

(c) Cost of attendance. A GEAR UP

scholarship, in combination with other

student financial assistance awarded

under any title IV HEA program and any

other grant or scholarship assistance,

may not exceed the student’s cost of

attendance.

(d) Continuation scholarships. A

State, or a Partnership that chooses to

participate in the scholarship

component in accordance with section

404E of the HEA in its GEAR UP project,

must award continuation scholarships

in successive award years to each

student who received an initial

scholarship and who continues to be

eligible for a scholarship.

(e) Order of Scholarships. (1) In

general. Notwithstanding 34 CFR 673.5,

in awarding GEAR UP scholarships, a

State or Partnership must ensure that,

for each recipient of a scholarship under

this part who is eligible for and

receiving other postsecondary student

financial assistance, a Federal Pell

Grant, if applicable, be awarded first,

any other public or private grants,

scholarships, or tuition discounts be

awarded second, a GEAR UP

scholarship be awarded third, and then

any other financial assistance, such as

loans or work-study, be awarded.

(2) Exception. Notwithstanding

paragraph (e)(1) of this section, a State

or Partnership is not required to ensure

that a GEAR UP scholarship recipient’s

financial aid be awarded in the order set

forth in paragraph (e)(1) only if—

(i) It determines and documents in

writing that there are exceptional

circumstances related to the GEAR UP

student’s aid that are unique to that

GEAR UP student;

(ii) It documents and maintains in the

GEAR UP student’s file the modification

that was made to the GEAR UP student’s

award package and the reason for the

modification; and

(iii) It provides written notification to

the GEAR UP student of the reason for

and the specific modification that was

made to the package.

(Authority: 20 U.S.C. 1070a–25)

§ 694.11 Under what conditions may a

Partnership that does not participate in the

GEAR UP scholarship component under

section 404E of the HEA provide financial

assistance for postsecondary education to

students under the GEAR UP early

intervention component?

A GEAR UP Partnership that does not

participate in the GEAR UP scholarship

component may provide financial

assistance for postsecondary education,

either with funds under this chapter,

(Under Chapter 2 of subpart 2 of Part A

of Title IV of the HEA,) or with nonFederal funds used to comply with the

matching requirement, to students who

participate in the early intervention

component of GEAR UP if—

(a) The financial assistance is directly

related to, and in support of, other

activities of the Partnership under the

early intervention component of GEAR

UP; and

(b) It complies with the requirements

in § 694.10.

(Authority: 20 U.S.C. 1070a–21 to 1070a–28)

§ 694.12 How does a State determine

which State agency will apply for, and

administer, a State grant under this

program?

The Governor of a State must

designate which State agency applies

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Rules and Regulations 24763

for, and administers, a State grant under

GEAR UP.

(Authority: 20 U.S.C. 1070a–21 to 1070a–28)

§ 694.13 What requirements must be met

by a Partnership or State participating in

GEAR UP with respect to 21st Century

Scholarship Certificates?

(a) A State or Partnership must

provide, in accordance with procedures

the Secretary may specify, a 21st

Century Scholar Certificate from the

Secretary to each student participating

in the early intervention component of

its GEAR UP project.

(b) 21st Century Scholarship

Certificates must be personalized and

indicate the amount of Federal financial

aid for college that a student may be

eligible to receive.

(Authority: 20 U.S.C. 1070a–26)

§ 694.14 What requirements apply to a

State that served students under the

National Early Intervention Scholarship and

Partnership program (NEISP) and that

receives a GEAR UP grant?

Any State that receives a grant under

this part and that served students under

the NEISP program on October 6, 1998

must continue to provide services under

this part to those students until they

complete secondary school.

(Authority: 20 U.S.C. 1070a–21)

§ 694.15 What priorities may the Secretary

establish for a GEAR UP grant?

For any fiscal year, the Secretary may

select one or more of the following

priorities:

(a) Projects by Partnerships or States

that serve a substantial number or

percentage of students who reside, or

attend a school, in an Empowerment

Zone, including a Supplemental

Empowerment Zone, or Enterprise

Community designated by the U.S.

Department of Housing and Urban

Development or the U.S. Department of

Agriculture.

(b) Partnerships that establish or

maintain a financial assistance program

that awards scholarships to students,

either in accordance with section 404E

of the HEA, or in accordance with

§ 694.11, to strengthen the early

intervention component of its GEAR UP

project.

(Authority: 20 U.S.C. 1070a–21 to 1070a–28)

[FR Doc. 00–10324 Filed 4–26–00; 8:45 am]

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