[Federal Register Volume 62, Number 187 (Friday, September 26, 1997)]
[Rules and Regulations]
[Pages 50846-50848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25658]


      

[[Page 50845]]


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Part VIII





Department of Education





_______________________________________________________________________



34 CFR Parts 674, 675, and 676



Federal Perkins Loan Program, Federal Work Study Program, and Federal 
Supplemental Educational Opportunity Grant Program; Final Rule

Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / 
Rules and Regulations

[[Page 50846]]



DEPARTMENT OF EDUCATION

34 CFR Parts 674, 675, and 676

RIN 1840-AC40


Federal Perkins Loan Program, Federal Work-Study Program, and 
Federal Supplemental Educational Opportunity Grant Program

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: This document contains amendments to regulatory provisions 
that provide consistency among program regulations, correct minor 
technical errors and omissions in the existing regulations governing 
the programs, and conform with self-implementing provisions of the 
Higher Education Act of 1965, as amended (HEA). The student financial 
assistance programs authorized by title IV of the HEA, include the 
campus-based programs (Federal Perkins Loan, Federal Work-Study (FWS), 
and Federal Supplemental Educational Opportunity Grant (FSEOG) 
programs).

EFFECTIVE DATE: These regulations take effect October 27, 1997.

FOR FURTHER INFORMATION CONTACT:

    1. For the FWS and FSEOG programs: Ms. Kathy Gause, Campus-Based 
Grants Program Specialist, U.S. Department of Education, 600 
Independence Avenue, SW, Regional Office Building 3, Room 3053, 
Washington, DC 20202-5447. Telephone: (202) 708-8242.
    2. For the Federal Perkins Loan Program: Ms. Gail McLarnon, Campus-
Based Loan Program Specialist, U.S. Department of Education, 600 
Independence Avenue, SW, Regional Office Building 3, Room 3053, 
Washington, DC 20202-5447. Telephone: (202) 708-8242.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) by contacting the person listed in the preceding paragraph.
    Individuals who use a telecommunications device for the deaf (TDD) 
may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 
between 8 a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: On March 4, 1995, the President directed 
every Federal agency to review its rules and procedures to reduce 
regulatory and paperwork burden and directed Federal agencies to 
eliminate or revise those regulations that are outdated or otherwise in 
need of reform.
    As part of his response to the President's Regulatory Reinvention 
Initiative, and to improve program accountability to protect students 
and the Federal fiscal interest, the Secretary published amendments to 
the cash management regulations contained in part 668, subpart K, in 
the Federal Register (61 FR 60578-60610) on November 29, 1996 
(effective date July 1, 1997). The campus-based programs regulations 
are amended to conform with the cash management regulations published 
on November 29, 1996, and to correct errors and omissions in the text 
of the campus-based programs existing regulations.
    Although these regulations do not establish any new policies, there 
are issues surrounding the technical changes to the regulations that 
govern the Federal Perkins Loan Program that need further explanation. 
Several Federal Perkins Loan Program regulatory provisions are amended 
to conform with self-implementing provisions of the HEA. The following 
list summarizes those issues:

Federal Perkins Loan Program

Default Reduction Plan--Section 674.6

    The Secretary amends Sec. 674.6 to eliminate the option allowing 
institutions to submit a statement to the Secretary indicating that 
they, in order to satisfy the requirement to establish and implement a 
default reduction plan for their Federal Perkins Loan Program, agree to 
apply to their Federal Perkins Loan Program the default management plan 
in place for their Federal Family Education Loan (FFEL) Program. This 
change is being made because as of July 1, 1996, institutions 
participating in the FFEL Program are no longer required to develop 
default management plans.

Student Eligibility--Section 674.9

    An incorrect cross-reference has been corrected in paragraph (a) by 
removing ``34 CFR 668.7,'' and adding, in its place, ``34 CFR 668.32.''

Fiscal Procedures and Records--Section 674.19

    An incorrect cross-reference has been corrected in paragraph (b) by 
removing ``Sec. 668.164,'' and adding, in its place, ``Sec. 668.163.''

Promissory Note--Section 674.31 and Repayment--Section 674.33

    The Secretary amends Secs. 674.31 and 674.33 to add language 
requiring institutions to exclude periods of forbearance in determining 
the 10-year repayment period for a Federal Perkins loan. This language, 
which reflects section 464(c)(4) of the HEA, was inadvertently omitted 
from the current Federal Perkins Loan Program regulations.
    The Secretary also amends Sec. 674.33(b)(6)(ii) by adding a 
reference to a $30 minimum monthly payment rate for Direct loans. This 
reference was inadvertently omitted when the Secretary published final 
regulations on November 30, 1994, that revised the minimum monthly 
payment rate language in this section to reflect the new $40 rate for 
Federal Perkins loans in accordance with the HEA.

Deferment of Repayment--Section 674.34

    The Secretary amends Sec. 674.34(h) to clarify that an institution 
may not include the period of the post-deferment grace period in 
determining the 10-year repayment period for a Federal Perkins loan in 
accordance with section 464(c)(2)(A)(iv) of the HEA.

Deferment of Repayment--Federal Perkins Loans Made Before July 1, 
1993--Section 674.35, Deferment of Repayment--Direct Loans Made on or 
After October 1, 1980, but Before July 1, 1993--Section 674.36, and 
Deferment of Repayment--Direct Loans Made Before October 1, 1980 and 
Defense Loans--Section 674.37

    The Secretary amends Secs. 674.35, 674.36, and 674.37 to add the 
hardship deferment to the list of the qualifying deferment periods that 
are not to be included in the 10-year repayment period for a Federal 
Perkins loan. This change reflects section 464(c)(4) of the HEA and was 
inadvertently omitted from the Federal Perkins Loan Program 
regulations.

Collection Procedures--Section 674.45

    The Secretary amends Sec. 674.45(c)(1)(ii)(A) by eliminating the 
phrase ``unless specifically prohibited by State law,'' in order to 
make this paragraph consistent with section 484A of the HEA and 
Sec. 674.45(g). Final regulations published on November 30, 1994, in 
accordance with the HEA, added Sec. 674.45(g), the provisions of which 
specifically preempt State statutes, regulations, or rules that would 
hinder satisfaction of requirements that an institution must carry out 
in collecting Federal Perkins loans.

Cancellation Procedures--Section 674.52

    The Secretary amends Sec. 674.52(d)(2) by adding Sec. 674.58 to the 
cross-references. This cross-reference, which reflects the changes made 
to section 464(c)(2)(A)(iv) of the HEA, was inadvertently omitted from 
the Federal

[[Page 50847]]

Perkins Loan Program regulations. The addition of a cross-reference to 
Sec. 674.58 allows a borrower with a loan made on or after July 1, 
1993, to defer repayment while doing service that qualifies for 
cancellation in a Head Start program.

Federal Work-Study Program

    There are no major changes to the FWS Program. However, the 
Secretary has made some minor technical changes as described in the 
following paragraphs.

Student Eligibility--Section 675.9

    An incorrect cross-reference has been corrected in paragraph (a) by 
removing ``34 CFR 668.7,'' and adding, in its place, ``34 CFR 668.32.''

Fiscal Procedures and Records--Section 675.19

    An incorrect cross-reference has been corrected in paragraph (a)(3) 
by removing ``Sec. 668.164,'' and adding, in its place, 
``Sec. 668.163.''

Eligible Employers and General Conditions and Limitations on 
Employment--Section 675.20

    The Secretary amends Sec. 675.20(b)(1) to add the word ``public'' 
after the word ``local,'' and to delete the phrase ``(see appendix B 
for a sample agreement)'' in paragraph (b)(1). Appendix B was 
previously removed from regulations and is now included in the Federal 
Student Financial Aid Handbook

Employment Provided by a Federal, State, or Local Public Agency, or a 
Private Nonprofit Organization--Section 675.22

    The Secretary amends Sec. 675.22 to add the word ``public'' after 
the word ``local'' in the section heading.

Nature and Source of Institutional Share--Section 675.27

    A typographical error has been corrected in the authority citation 
following the section.

Federal Supplemental Educational Opportunity Grant Program

    There are no major changes to the FSEOG Program. However, the 
Secretary has made some minor technical changes as described in the 
following paragraphs.

Student Eligibility--Section 676.9

    An incorrect cross-reference has been corrected in paragraph (a) by 
removing ``34 CFR 668.7,'' and adding, in its place, ``34 CFR 668.32.''

Fiscal Procedures and Records--Section 676.19

    An incorrect cross-reference has been corrected in paragraph (a)(2) 
by removing ``Sec. 668.164,'' and adding, in its place, 
``Sec. 668.163.''

Paperwork Reduction Act of 1995

    These regulations have been examined under the Paperwork Reduction 
Act of 1995 and have been found to contain no information collection 
requirements.

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations would not have a 
significant economic impact on a substantial number of small entities. 
The small entities affected by these regulations are small institutions 
of higher education. These regulations contain technical amendments 
that correct current regulations.
    The changes will not have a significant economic impact on the 
institutions affected.

Waiver of Proposed Rulemaking

    In accordance with the Administrative Procedure Act, 5 U.S.C. 553, 
it is the practice of the Secretary to offer interested parties the 
opportunity to comment on proposed regulations. However, the regulatory 
changes in this document are necessary to correct minor technical 
errors, to implement mandatory statutory provisions, and to correct 
omissions in the campus-based programs existing regulations. The 
changes in this document do not establish any new policies. Therefore, 
the Secretary has determined that publication of a proposed rule is 
unnecessary and contrary to the public interest under 5 U.S.C. 
553(b)(B).

Intergovernmental Review

    The Federal Supplemental Educational Opportunity Grant 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, this document is intended to provide 
early notification of the Department's specific plans and actions for 
this program.
    The Federal Perkins Loan and Federal Work-Study programs are not 
subject to the requirements of Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    Based on its own review, the Department has determined that the 
regulations in this document would not require transmission of 
information that is being gathered by or is available from any other 
agency or authority of the United States.

List of Subjects

34 CFR Part 674

    Loan programs--education, Student aid, Reporting and recordkeeping 
requirements.

34 CFR Part 675

    Colleges and universities, Employment, Grant programs--education, 
Student aid, Reporting and recordkeeping requirements.

34 CFR Part 676

    Grant programs--education, Student aid, Reporting and recordkeeping 
requirements.

    Dated: September 23, 1997.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant Program; 84.033 Federal 
Work-Study Program; and 84.038 Federal Perkins Loan Program)

    The Secretary amends parts 674, 675, and 676 of Title 34 of the 
Code of Federal Regulations as follows:

PART 674--FEDERAL PERKINS LOAN PROGRAM

    1. The authority citation for part 674 continues to read as 
follows:

    Authority: 20 U.S.C. 1087aa-1087hh and 20 U.S.C. 421-429, unless 
otherwise noted.


Sec. 674.6  [Amended]

    2. Section 674.6 is amended by removing the semicolon at the end of 
paragraph (a)(1) and adding, in its place, ``, or''; by removing ``; 
or'' at the end of paragraph (a)(2) and by adding, in its place, a 
period; and by removing paragraph (a)(3).


Sec. 674.9  [Amended]

    3. Section 674.9(a) is amended by removing ``34 CFR 668.7'' and by 
adding, in its place, ``34 CFR 668.32''.


Sec. 674.19  [Amended]

    4. Section 674.19(b) is amended by removing ``Sec. 668.164'' and 
adding, in its place, ``Sec. 668.163''.
    5. Section 674.31(b)(2)(i)(D) is revised to read as follows:


Sec. 674.31  Promissory note.

* * * * *

[[Page 50848]]

    (b) * * *
    (2) * * *
    (i) * * *
    (D) May vary because of minimum monthly repayments (see 
Sec. 674.33(b)), extensions of repayment (see Sec. 674.33(c)), 
forbearance (see Sec. 674.33(d)), or deferments (see Secs. 674.34, 
674.35, and 674.36);
* * * * *
    6. Section 674.33 is amended by adding ``for a Direct Loan or'' 
after ``$30'' in paragraph (b)(6)(ii), and by adding a new paragraph 
(d)(8) to read as follows:


Sec. 674.33  Repayment.

* * * * *
    (d) * * *
    (8) The institution may not include the periods of forbearance 
described in this paragraph in determining the 10-year repayment 
period.
* * * * *
    7. Section 674.34(h) is revised to read as follows:


Sec. 674.34  Deferment of repayment--Federal Perkins loans and Direct 
loans made on or after July 1, 1993.

* * * * *
    (h) The institution may not include the deferment periods described 
in paragraphs (b), (c), (d), (e), (f), and (g) of this section and the 
period described in paragraph (i) of this section in determining the 
10-year repayment period.
* * * * *
    8. Section 674.35 is amended by removing ``(see Sec. 674.56)'' in 
paragraph (c)(1) and adding, in its place, ``(see Sec. 674.59)''; by 
removing ``(see Sec. 674.57)'' in paragraphs (c)(3) and (4) and adding, 
in its place, ``(see Sec. 674.60)''; by removing paragraph (g); by 
redesignating paragraph (i) as paragraph (g); by redesignating 
paragraph (h) as paragraph (i); and by adding a new paragraph (h) to 
read as follows:


Sec. 674.35  Deferment of repayment--Federal Perkins loans made before 
July 1, 1993.

* * * * *
    (h) The institution may not include the deferment periods described 
in paragraphs (b), (c), (d), (e), (f), and (g) of this section and the 
period described in paragraph (i) of this section when determining the 
10-year repayment period.
* * * * *


Sec. 674.36  [Amended]

    9. Section 674.36 is amended by removing ``(see Sec. 674.56)'' in 
paragraph (c)(1) and adding, in its place, ``(see Sec. 674.59)''; by 
adding ``(see Sec. 674.60)'' before the semicolon in paragraphs (c)(2) 
and (c)(3); and by removing ``and'' after ``(c),'' and adding ``, and 
(e)'' after ``(d)'' in paragraph (f).


Sec. 674.37  [Amended]

    10. Section 674.37 is amended by removing ``(see Sec. 674.56)'' in 
paragraph (c)(1) and adding in its place ``(see Sec. 674.59)''; by 
adding ``(see Sec. 674.60)'' before the semicolon in paragraph (c)(2) 
and before the period in paragraph (c)(3); and by removing ``and (c)'' 
after ``(b)'' and adding, in its place, ``, (c), and (e)'' in paragraph 
(d).


Sec. 674.45  [Amended]

    11. Section 674.45(c)(1)(ii)(A) is amended by removing ``, unless 
specifically prohibited by State law,'' after ``shall''.


Sec. 674.52  [Amended]

    12. Section 674.52(d)(2) is amended by removing ``or'' before 
``674.57'' and by adding ``, or 674.58'' after ``674.57''.

PART 675--FEDERAL WORK-STUDY PROGRAMS

    13. The authority citation for part 675 continues to read as 
follows:

    Authority: 42 U.S.C. 2751-2756b, unless otherwise noted.


Sec. 675.9  [Amended]

    14. Section 675.9(a) is amended by removing ``34 CFR 668.7'' and 
adding, in its place, ``34 CFR 668.32''.


Sec. 675.19  [Amended]

    15. Section 675.19(a)(3) is amended by removing ``Sec. 668.164'' 
and adding, in its place, ``Sec. 668.163''.


Sec. 675.20  [Amended]

    16. Section 675.20(b)(1) is amended by adding ``public'' after 
``local'' in the first sentence and by removing in the second sentence 
``(see Appendix B for a sample agreement)''.


Sec. 675.22  [Amended]

    17. Section 675.22 is amended by adding in the heading ``public'' 
after ``local''.


Sec. 675.27  [Amended]

    18. Section 675.27 is amended by revising the authority citation 
following the section to read as follows:

(Authority: 42 U.S.C. 2754)

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT 
PROGRAM

    19. The authority citation for part 676 continues to read as 
follows:

    Authority: 20 U.S.C. 1070b-1070b-3, unless otherwise noted.


Sec. 676.9  [Amended]

    20. Section 676.9(a) is amended by removing ``34 CFR 668.7'' and 
adding, in its place, ``34 CFR 668.32''.


Sec. 676.19  [Amended]

    21. Section 676.19(a)(2) is amended by removing ``Sec. 668.164'' 
and adding, in its place, ``Sec. 668.163''.

[FR Doc. 97-25658 Filed 9-25-97; 8:45 am]
BILLING CODE 4000-01-P