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[Federal Register Volume 78, Number 15 (Wednesday, January 23, 2013)]
[Rules and Regulations]
[Pages 5035-5054]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01125]

[[Page 5035]]

Vol. 78

Wednesday,

No. 15

January 23, 2013

Part III

Department of Education

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34 CFR Chapter VI

Final Priorities; Gaining Early Awareness and Readiness for 
Undergraduate Programs (GEAR UP)--College Savings Account Research 
Demonstration Project; Final Rule

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

[[Page 5036]]

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DEPARTMENT OF EDUCATION

34 CFR Chapter VI

[CFDA Number: 84.334D.]

Final Priorities; Gaining Early Awareness and Readiness for 
Undergraduate Programs (GEAR UP)--College Savings Account Research 
Demonstration Project

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final priorities.

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SUMMARY: The Assistant Secretary for Postsecondary Education announces 
priorities under the GEAR UP College Savings Account Research 
Demonstration Project. The Assistant Secretary may use these priorities 
for competitions in fiscal year (FY) 2013 and later years. We take this 
action to determine the effectiveness of implementing college savings 
accounts and providing financial counseling in conjunction with other 
GEAR UP activities as part of an overall college access and success 
strategy.

DATES: Effective Date: These priorities are effective February 22, 
2013.

FOR FURTHER INFORMATION CONTACT: Catherine St. Clair, U.S. Department 
of Education, 1990 K Street NW., room 7056, Washington, DC 20006-8524. 
Telephone: (202) 502-7579 or by email: Catherine.StClair@ed.gov.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone, call the Federal Relay Service, toll free, at 1-800-877-
8339.

SUPPLEMENTARY INFORMATION:
    Purpose of Program: The GEAR UP Program is a discretionary grant 
program that provides financial support for academic and related 
support services that eligible low-income students, including students 
with disabilities, need to enable them to obtain a secondary school 
diploma and prepare for and succeed in postsecondary education.
    Program Authority: 20 U.S.C. 1070a-21 to 1070a-28.
    We published a notice of proposed priorities (NPP) for this program 
in the Federal Register on June 1, 2012 (77 FR 32612). That notice 
contained background information and our reasons for proposing the 
priorities.
    There are differences between the NPP and this notice of final 
priorities (NFP) as discussed in the Analysis of Comments and Changes 
section elsewhere in this notice.
    A summary of the major changes follows.
     GEAR UP State grantees that received a new State grant in 
FY 2012 and will have ninth grade students in the 2014-2015 academic 
year are eligible to apply for funding.
     The Federal matching contribution has been changed from up 
to $10 per month to up to $25 per month for a maximum of $300 in 
Federal matching funds each year for a maximum of four years.
     The funding eligibility criteria have been changed so 
that, to be eligible, a GEAR UP State grant funded in FY 2011 or FY 
2012 must support activities under this demonstration project in at 
least six high schools, each of which must serve a cohort of at least 
30 ninth grade GEAR UP students. For the purposes of these priorities, 
a high school must serve students in grades 9-12.
     Applicants must identify the names, locations, and 
National Center for Education Statistics (NCES) identification numbers 
of the GEAR UP high schools that the applicant proposes to participate 
in the demonstration project.
     Project directors and appropriate project staff are 
required to participate in meetings that the Department will convene, 
likely in conjunction with the annual meetings of the National Council 
for Community and Education Partnerships (NCCEP), to provide 
professional development and technical assistance to grantees 
participating in the demonstration project.
     In order to protect the integrity of the project 
evaluation, grantees may not solicit, or raise money from, non-Federal 
sources as additional contributions to the student's non-Federal 
college savings account.
    Public Comment: In response to our invitation in the notice of 
proposed priorities, 19 parties submitted comments.
    Generally, we do not address technical and other minor changes, or 
suggested changes the law does not authorize us to make. In addition, 
we do not address general comments that raised concerns not directly 
related to the proposed priorities.
    Analysis of Comments and Changes: An analysis of the comments and 
of any changes in the priorities since publication of the notice of 
proposed priorities follows.
    Comment: Commenters were generally very supportive of the 
Department's proposal. They offered various suggestions for improving 
the demonstration program, keeping in mind the Department's desire to 
provide and promote incentives for greater college savings by families 
of GEAR UP students, keep administrative costs and effort manageable, 
provide flexibility where possible, and develop and implement a study 
design that would answer important questions about the usefulness of 
college savings accounts as a way to promote increased high school 
graduation rates and rates of enrollment in postsecondary education.
    Discussion: The Department appreciates these comments and is 
gratified that the commenters were generally very supportive of our 
proposal and the desirability of this special GEAR UP project. We 
address our responses to areas of specific commenter recommendations, 
by topic heading, in the following discussion.
    Changes: None.

Costs, Training, and Support

    Comment: One commenter asked for clarification about whether, given 
the GEAR UP program's match requirement, grantees would need to raise 
additional matching funds on top of the funds they must already raise 
to support their regular GEAR UP projects. The commenter stated that 
applicants need to know the extent of their financial commitment before 
they apply, and that unless these funds are needed to carry out the 
demonstration project, the Department should consider waiving the 
additional matching fund requirement.
    Another commenter also sought clarification about the requirement 
that grantees provide a matching contribution to the amount of the GEAR 
UP award for this demonstration project.
    Discussion: Under section 404C(b) of the HEA, successful GEAR UP 
applicants must provide from State, local, institutional, or private 
funds, not less than 50 percent of the cost of the program. The 
regulations at 34 CFR Sec.  694.7(a) and (b) further require that 
applicants must include in their budgets the percentage of costs of the 
GEAR UP project to be provided annually from non-Federal funds, and 
grantees must make substantial progress toward meeting the matching 
percentage stated in the approved application for each year of the 
project period.
    Successful applicants for the College Savings Account Research 
Demonstration Project must already be GEAR UP program State grantees, 
and the Department expects that most recipients of these demonstration 
grants will not have to provide additional matching funds beyond what 
they are already providing to meet the match for their initial GEAR UP 
award. This is because a grantee may count any ``over-matched'' non-
Federal funds it has already committed to its regular GEAR UP project 
toward its match for the

[[Page 5037]]

demonstration project. Moreover, a grantee under this demonstration 
project may treat contributions of students, families, or others to a 
student savings account as a matching contribution in its project 
budget. If, however, during any project year these private 
contributions to savings accounts are less than anticipated, a State 
would have to ensure by the end of each project year that it had met 
the annual matching requirement through other non-Federal contributions 
to this project or to the regular GEAR UP activities. Thus, we 
anticipate that only those grantees that have not ``over-matched'' non-
Federal funds in their regular GEAR UP projects or that do not secure 
sufficient non-Federal deposits in the students' savings accounts will 
need to contribute non-Federal matching contributions to their College 
Savings Account Research Demonstration projects.
    Changes: We have added a clarifying citation to 34 CFR Sec.  694.7 
in Priority 2, section I, paragraph (n).
    Comment: One commenter recommended the use of online resources to 
facilitate the project.
    Discussion: The Department agrees that online resources are 
important for helping students and families manage their accounts. 
Under Priority 2, successful applicants must ensure that students, 
students' parents, or others on the students' behalf are able to make 
online deposits to accounts. In addition, students also must be able to 
view account balances online. While the Department believes that online 
resources could also be a very useful source of support for the 
required financial counseling or technical assistance and professional 
development for staff, we do not think it is appropriate to require 
online access for these purposes. Rather, grantees should have 
flexibility to take advantage of the resources that they believe are 
best suited for their projects.
    Changes: None.
    Comment: A commenter was concerned that the Background section of 
the notice of proposed priorities provided conflicting information 
about the amount of seed money that grantees will make available from 
GEAR UP funds for GEAR UP students.
    Discussion: We agree with this commenter that the Background 
section of the NPP should not have referred to an approximate amount of 
seed money.
    Changes: This notice of final priorities clarifies that the amount 
of seed money for a GEAR UP-funded account for each participating GEAR 
UP student is $200. The seed amount is set out in Priority 2, Section 
I, paragraph (b)(1).
    Comment: A commenter suggested that the Department consider 
establishing basic design requirements--for both program management and 
evaluation purposes--for data and account management as most grantees 
will not have experience in the administration of these kinds of 
college savings accounts. The commenter also suggested that we provide 
grantees with data collection software and training on how to use it. 
Other commenters noted that it will be critical for grantees to receive 
guidance, technical assistance, and access to experts on establishing 
and maintaining these savings accounts, and on the responsibilities of 
trustees and custodians.
    Another commenter stated that the Department should be prepared to 
assist grantees in negotiating account features and contract terms with 
financial institution partners, and may even need to solicit financial 
institution partners for grantees.
    Another commenter stated that based on its experience with schools, 
local governments, and others in the design and development of college 
savings accounts, grantees will likely need significant technical 
support from the Department in various areas of their projects, 
particularly in the selection of savings accounts, program design, and 
program administration.
    Finally, noting that the Department had proposed that money 
families deposit into students' college savings accounts would not 
count against their children for purposes of determining eligibility 
for Federal student financial assistance, one commenter recommended 
that we likewise ensure that these savings be excluded from other 
means-tested Federal programs, such as Medicaid and Temporary Aid to 
Needy Families. The commenter stated that if both the Federal-funds 
account and the student's account are held in trust, the fact that the 
family does not have direct ownership of either should resolve the 
issue, but the commenter also noted that any hint of worry about this 
issue might create a chilling effect on deposit activity. The commenter 
recommended that the Department provide guidance to account 
administrators on how to address this issue of asset test at the 
Federal, State, and local levels and how to communicate the answers to 
students and families.
    Discussion: The Department agrees that extensive and ongoing 
technical assistance on important aspects of project implementation is 
crucial to helping grantees establish and manage savings accounts, and 
that this kind of support is particularly important for those with no 
experience in this area. To address these concerns, the Department 
plans to provide presentations and other technical assistance on 
important aspects of project implementation at national GEAR UP 
conferences. These activities would include general considerations that 
should be taken into account when implementing these types of savings 
accounts. The Department is also working with the Treasury Department, 
the National Credit Union Administration (NCUA), and the Federal 
Deposit Insurance Corporation (FDIC) to develop materials that will 
give applicants key information about implementing college savings 
accounts, including tax and asset test implications, such as those 
pertaining to Medicaid and Temporary Aid to Needy Families. However, 
grantees would tailor account characteristics to best meet their needs 
and the needs of their GEAR UP students, and would select their own 
financial partners, provided the requirements of Priority 2 are met.
    The Department would not participate in grantee (or applicant) 
discussions with financial institutions that would (or might) implement 
these savings accounts. With regard to the comment that the Department 
provide data collection software and training in its use, the 
Department may not endorse any specific data-collection software 
programs. Grantees should use their professional judgment in selecting 
appropriate software that meets their needs and the needs of the 
financial institutions with which they would partner. Grant funds may 
be used to purchase software and any needed training in its use for the 
purpose of providing and tracking demonstration project services and 
outcomes.
    Changes: None.
    Comment: One commenter wanted clarity on whether grantees may use 
grant funds for costs of programmatic support, given that certain 
supportive project activities, such as outreach and account 
administration, are labor intensive and particularly necessary at the 
local level.
    Discussion: The Department understands that college savings account 
programs can be labor intensive and require a significant investment in 
outreach and administration to be successful. In the proposed budgets 
they include in their project applications, applicants should include 
all expected costs of implementing the proposed projects, including 
provision of payment to the account administrator, the account trustee, 
and costs for managing and administering the project

[[Page 5038]]

over the course of the project period (and later if the grantee expects 
the account administrator to be conducting activities after the end of 
the project period).
    Changes: None.
    Comment: One commenter recommended that demonstration projects 
partner with local organizations, such as public broadcasting stations, 
to create high-quality digital content and services on financial 
literacy.
    Another commenter said that the success of State GEAR UP grantees 
will require strong partnerships with local governments and school 
districts.
    One commenter recommended that the applications from State grantees 
include plans for local partnerships. This commenter noted that local 
partnerships can also help to tie this savings demonstration project to 
other community-based programs, such as free tax preparation, financial 
education resources, and help with the process of preparing a student's 
FAFSA application.
    Discussion: The Department is currently working with the Treasury 
Department, the NCUA, the FDIC, and other Federal and non-Federal 
partners to identify other opportunities to provide grantees with 
technical assistance around financial literacy. Further, while we agree 
that grantees partnering with local organizations to create high-
quality digital content can be very important for helping students and 
their families better understand financial literacy, we do not believe 
that requiring such a partnership is necessary. Grantees will be 
working with local educational agencies that already are implementing 
GEAR UP projects, and those GEAR UP grantees already engage in 
community partnerships that are key to the successful implementation of 
a GEAR UP project. We are confident that if a State GEAR UP grantee 
believes that a local partnership to develop digital materials would 
contribute to the success of this demonstration project, it will 
include this activity in its application. However, because we believe 
that applicants should design their applications using their best 
judgment of how best to achieve the goal of having the largest number 
of families of GEAR UP students make regular deposits in their 
children's college savings accounts, we do not believe that requiring 
all grantees to partner with local organizations that can help to 
create high-quality digital content is either necessary or desirable.
    Changes: None.
    Comment: One commenter recommended the Department take specific 
actions to promote financial literacy, such as providing support to 
grantees to identify and select quality financial education curricula.
    Discussion: The Department will offer ongoing trainings to grantees 
that will include group format trainings (at annual GEAR UP conferences 
or via Webinar) and one-on-one advising, as needed. The Department is 
also holding discussions with Federal and non-Federal partners to 
identify other opportunities to provide support for grantees. This 
includes developing materials that will give applicants key information 
about implementing college savings accounts. The Department will also 
monitor financial education delivery over time to ensure quality.
    Changes: None.

Funding Eligibility

    Comment: A number of commenters recommended that the Department 
expand eligibility so that the demonstration project may benefit 
priority students served in a State GEAR UP project as well as students 
who are in a cohort.
    One commenter noted that by limiting eligibility to State GEAR UP 
grantees that use the cohort approach, the Department is making 
ineligible many valuable, experienced, and interested stakeholders, 
including existing GEAR UP grantees, and it is limiting its ability to 
identify crucial barriers to implementation on a broader scale.
    A second commenter did not question our proposal that eligibility 
not extend to schools in which members of a GEAR UP cohort already are 
the beneficiaries of a matched college savings account program. Rather, 
it urged the Department to permit schools to be eligible if these 
college savings accounts were only made available in those schools to 
GEAR UP priority students who would not participate in this 
demonstration project. The commenter stated that one State would soon 
be implementing this kind of hybrid program and did not believe 
ineligible students under the State's program should also be ineligible 
under this demonstration program.
    Another commenter recommended that eligibility be expanded to 
include both partnership and State GEAR UP grantees that meet all 
requirements of this competition.
    Discussion: We appreciate the broad interest in the project. While 
the Department agrees that both State and partnership grantees using 
the priority model for determining student eligibility are engaging in 
important and high-quality work, we have limited the pool of eligible 
grantees to State GEAR UP grantees that determine eligibility using the 
cohort approach for two reasons.
    First, permitting students who are selected for the regular GEAR UP 
project on the basis of priority to participate in this college savings 
account demonstration is incompatible with the project's research 
design. In order to ensure that the potential effects of savings 
accounts are properly evaluated, grantees will need to serve entire 
cohorts (i.e., grades) of students in at least six GEAR UP high schools 
that (1) can be randomly assigned, and (2) have a sufficient number of 
GEAR UP participants in a ninth grade cohort whose progress and 
outcomes can be tracked over the grant period. We think that being able 
to evaluate the effects of savings accounts provided to all students in 
a cohort is important, because serving all students may create peer 
effects that indicate the importance of providing such accounts to 
every student, as opposed to a few individuals in a given school. Such 
a structure, however, necessitates that entire grades participate in 
the GEAR UP program, which is the case for a State grant that selects 
students using the cohort approach but not for grants that select 
students using the priority approach.
    Second, with regard to the comment that we extend eligibility to 
apply for a grant under this demonstration project to GEAR UP 
partnership grantees that select students using the cohort approach, we 
first note that under section 404D(a) and (b) of the HEA, GEAR UP funds 
may be used for scholarships and other financial assistance for 
participating students only as provided in section 404E of the HEA; 
therefore the use of GEAR UP funds for college savings accounts is 
permissible only as a supplement to the GEAR UP funds that a grantee is 
already reserving for financial assistance under section 404E in its 
regular GEAR UP project. Few GEAR UP partnership grantees reserve GEAR 
UP funds in their regular projects under requirements in section 404E. 
Furthermore, we believe State GEAR UP grantees, unlike the few 
partnership grantees that reserve GEAR UP funds for financial 
assistance under section 404E, have the needed capacity and 
infrastructure in place to manage this demonstration project.
    Changes: None.
    Comment: One commenter recommended maintaining the cohort approach, 
believing that ``universality'' is critical to creating a college-going 
culture. This commenter also expressed concern about precluding States 
and

[[Page 5039]]

municipalities with strong knowledge and experience in establishing 
student accounts from applying and recommended that the Department 
extend eligibility to States that are not now current GEAR UP grantees 
and to GEAR UP partnership grantees with strong municipal partners.
    Discussion: While the Department appreciates that a number of 
States and municipalities have been conducting some innovative and 
promising experiments on college savings, the Department needs to limit 
this competition to existing GEAR UP grantees. Under section 404C(a) of 
the HEA, the Department may provide GEAR UP funds only to applicants 
that submit an application to conduct the full panoply of GEAR UP 
activities required by law, and the Department does not have program 
funding available to support new GEAR UP grantees that would conduct 
all of these program activities and also implement this demonstration 
project.
    In addition, an important part of evaluating the effectiveness of 
college savings accounts is to do so in the context of wraparound 
services--that is, supports that combine academic activities like 
providing tutoring or encouragement to enroll in challenging coursework 
with mentoring, information on student financial aid, building family 
engagement, and other help that is not explicitly academic in nature. 
By providing grants to existing programs that have been operating for 
at least a year or two, we are ensuring that demonstration project 
grantees have had the time needed to put those wraparound services into 
place in a way that new grantees could not.
    Finally, we are not extending eligibility to local GEAR UP projects 
with strong municipal partners for the reasons expressed in response to 
the prior comment.
    Changes: None.
    Comment: One commenter requested that we clarify whether the 
demonstration project is open to all students in a cohort or only to 
those who are low-income and, if the latter, how income requirements 
would be set.
    Discussion: The demonstration project is open to any students in a 
GEAR UP cohort beginning in ninth grade, so long as they attend a 
school that has been randomly selected to receive seed and match 
funding for the college savings accounts. There are no additional tests 
for income or poverty beyond those in section 404B(d) of the HEA that 
apply to the schools in which the cohorts of students are enrolled and 
in which State GEAR UP grantees are already providing GEAR UP services.
    Changes: None.
    Comment: Several commenters requested that the Department expand 
grantee eligibility under Priority 1 to allow FY 2012 GEAR UP State 
grantees with ninth graders in the fall of the 2014-2015 school year to 
participate in the demonstration project. These commenters stated that 
the Department's proposal unnecessarily limits the pool of potential 
State GEAR UP grantees eligible to participate in this project.
    Discussion: We agree with these comments. Under Proposed Priority 
1, GEAR UP State grantees that received a new award in FY 2012 and that 
select students on the basis of the cohort approach would not have been 
eligible to receive funding under this demonstration project because 
their students would predominantly be in the eighth grade during the 
2013-2014 academic year. However, we think it is appropriate to revise 
Priority 1 to permit GEAR UP State grantees that received new awards in 
2012 and that are using the cohort approach to apply for funding under 
this demonstration project. Doing so will help to ensure that more 
State GEAR UP grantees are able to participate without undermining the 
evaluation of the demonstration project.
    Changes: Eligibility has been expanded to include 2012 GEAR UP 
State grantees that select participating students using the cohort 
approach and that provide GEAR UP services to ninth graders in the fall 
of the 2014-2015 school year.
    Comment: Several commenters requested that the Department revise 
Priority 1 to lower the minimum class size of participating schools 
from the proposed 50 students in order to avoid bias against applicants 
serving rural schools.
    Discussion: The Department had initially proposed a class size of 
50 to ensure that services are provided in a cost-effective manner and 
to provide a sufficient cushion so that even if some students and their 
families chose not to agree to participate in the surveys needed for 
the project evaluation, the evaluation would still have a sufficiently 
large sample of students and families. However, we agree with these 
comments that the proposed minimum class size of 50 students may have 
been unnecessarily high and would have made it difficult for many rural 
schools to participate even if their State is among the successful 
applicants. Historical data from State grantees indicate that high 
schools served by GEAR UP using the cohort approach have an average of 
far more than 30 participants in the ninth grade cohorts. Using the 
lower number alleviates any potential rural bias but still ensures a 
sufficient number of GEAR UP students in each participating school both 
to enable cost-efficient administration of the demonstration activities 
and to sustain the integrity of the evaluation design.
    Changes: We have revised paragraph (a) in Section I of Priority 1 
to state that when the applicant begins providing college savings 
accounts to its GEAR UP ninth grade students, each of the applicant's 
participating schools must serve a cohort of a minimum of 30 ninth 
graders.
    Comment: One commenter noted the possibility that limiting 
applications to projects that select eligible GEAR UP students using 
the cohort approach could lead to overrepresentation of applications 
from certain geographic parts of the country. The commenter suggested 
that the Department consider having applicants identify their proposed 
projects as urban, rural, or suburban, and in the selection process 
give preference to applicants whose projects would serve urban and 
rural schools.
    Discussion: The Department agrees that the demonstration project 
should not unnecessarily disadvantage projects based upon the 
geographic location of their schools, particularly those serving 
schools in rural areas. That is why we are revising paragraph (a) in 
Section I of Priority 1 to specify that the applicant's high schools 
must each serve a minimum ninth grade class-size of 30 GEAR UP 
participants. Historical data from State GEAR UP grantees indicate that 
high schools using the cohort approach have an average of far more than 
30 participants in the ninth grade cohorts. Therefore, we believe that 
reducing the minimum number of participants to 30 will be sufficient to 
address any concerns about geographic distribution and that no other 
actions are required. The Department believes that urban schools do not 
need special priority. As applicants for grants under this 
demonstration project are State GEAR UP grantees, the size of schools 
that a State identifies for inclusion in the proposed project should 
have no impact on the quality of the applications. Hence reducing the 
required size of the ninth grade cohort to 30 will not negatively 
impact larger urban schools. Moreover, these urban schools already make 
up a large portion of existing GEAR UP projects. Finally, the 
Department has found no correlation between a State GEAR UP grantee's 
geographic location and its choice to

[[Page 5040]]

administer a cohort- or priority-based approach.
    Changes: We have revised paragraph (a) of Priority 1 to state that 
the schools that an applicant would serve must have at least 30 GEAR UP 
participants who will be in ninth grade during the 2013-2014 or 2014-
2015 academic year (depending on whether they received their new GEAR 
UP award in FY 2011 or FY 2012).
    Comment: One commenter recommended that the Department expand 
eligibility to include a GEAR UP State grantee initially funded in 
2008, asserting that its State has had significant experience with 
college savings accounts since 2003 and has the Nation's highest 
proportion of disadvantaged students.
    Another commenter recommended that the Department begin 
establishing the savings accounts and availability of match well before 
ninth grade for needy students whose parents are not college educated, 
given that these students would benefit from starting to save earlier 
in life.
    Discussion: The College Savings Accounts Research Demonstration 
Project is designed to study whether a combination of supported 
personal savings accounts and associated financial incentives and 
counseling provided during GEAR UP students' high school years will 
have a positive effect on a variety of measures of college readiness, 
financial well-being, high school graduation, and college enrollment. 
GEAR UP students participating in a State grant funded in 2008 would be 
in the twelfth grade at the start of the research study. Therefore, if 
we extended eligibility to include a GEAR UP State grantee initially 
funded in 2008, not only would GEAR UP funds provide these students 
with a very small amount of funding to be used for college expenses, 
but the research purpose of the demonstration project would not be 
realized.
    With respect to starting the demonstration project with students 
not yet in ninth grade, the Department recognizes that there may be 
some benefits to exploring the effectiveness of starting college 
savings earlier than ninth grade. However, one of the goals of the 
demonstration project is to look at the effects of college saving for a 
multiyear period while students are in high school. By starting with 
students in ninth grade cohorts, the Department can ensure that all 
students receiving college savings accounts will be attending high 
schools where they can receive the wraparound GEAR UP services that we 
think may be important for success in preparing them for, and promoting 
their enrollment in, college. By contrast, starting the demonstration 
projects when students are in an earlier grade could result in some 
students receiving valuable services while in middle school but then 
moving to high schools where they may not receive wraparound GEAR UP 
supports or the required financial counseling for the savings accounts. 
Moreover, in view of limitations on the amount of GEAR UP funds the 
Department has available to support this demonstration project, and our 
interest in receiving robust evaluation results earlier rather than 
later, we believe that beginning this demonstration project while 
students are in middle school would seriously undermine project 
results.
    Changes: None.
    Comment: One commenter recommended that any State-level project 
demonstrate clear and strong support of State political leadership, 
including the Governor, State treasurer, and school district 
leadership. The commenter stated that the demonstration projects would 
likely need cooperation among these offices for permissions and other 
data. The commenter further noted that State leadership would be 
particularly important if grantees used banks or credit unions rather 
than 529 college savings plans because individual banks and credit 
unions have their own account structures, unlike 529 plans.
    Discussion: The Department notes that, consistent with our 
proposal, paragraph (c) in Section II of Priority 2 requires a letter 
of support from the LEAs that would participate in the project. The 
Department agrees that a broad demonstration of support for the project 
is important to help ensure its success. However, we think 
demonstrations of support are most important from the districts and 
schools that participate. They will have to work with grantees to give 
students wraparound services, provide financial literacy information, 
and help ensure that the account administrator and trustee have the 
data they need for deposits, withdrawals, and distribution of GEAR UP 
funds. By contrast, while we think that having the endorsements of a 
State's political leadership could be helpful, projects can likely 
succeed without these endorsements, and requiring them would add 
additional, and we think unnecessary, burden to the application 
process.
    Changes: None.
    Comment: One commenter strongly recommended that students who 
enroll in GEAR UP schools in a grade whose cohort is served by a GEAR 
UP grant after the beginning of the demonstration project be allowed to 
participate and be given access to seeded savings accounts. The 
commenter stated that while researchers could track these students 
separately, the grantee should maintain a grade-level cohort.
    Discussion: In order to properly evaluate the effectiveness of the 
demonstration project, we need to start with a cohort of students in 
the ninth grade and then follow them throughout high school. Adding 
students who join the cohort after ninth grade would add costs to the 
project. And while the evaluation could separately track these students 
(with presumably smaller amounts of deposits in student accounts), 
doing so will add complexity to the evaluation. Therefore, we are not 
changing Priority 2 to require that grantees include in this project 
students who enter a participating school and join the cohort of GEAR 
UP students after the ninth grade.
    That said, we understand that prohibiting these students from 
receiving services and savings accounts provided through this project 
could be difficult to explain and could create very undesirable 
tensions in the school communities. For this reason, we believe that 
grantees should, if they desire, be able to establish accounts for 
students who join the grantees' ninth grade cohort by enrolling after 
ninth grade in high schools in which cohort members have already 
received accounts. However, if a grantee chooses to provide savings 
accounts to these new members of the cohort, it must ensure that it has 
sufficient GEAR UP program funds to first provide matching deposits for 
students it is required to serve.
    Changes: We have added a new paragraph (f)(4) in Section I of 
Priority 2 that, at the discretion of the grantee, permits students who 
become members of the GEAR UP cohort during the project period after 
transferring from a non-treatment high school into a treatment GEAR UP 
high school after ninth grade to have an account with the $200 seed 
money and availability of matching funds, provided that the grantee 
ensures that it has sufficient GEAR UP program funds to first provide 
matching deposits for students it is required to serve.
    Comment: None.
    Discussion: In Proposed Priority 1, the funding eligibility 
criteria would have required a GEAR UP State grant funded in FY 2011 or 
FY 2012 to support activities in ``multiple'' high schools. Through 
internal Department deliberation, we concluded that the term 
``multiple'' was too vague and that the better approach is to specify a

[[Page 5041]]

precise minimum number. We chose to use six schools as the threshold 
because it represents the minimum number of participating schools in 
each SEA that will make the project cost-effective to implement and 
evaluate.
    Changes: We have revised paragraph (a) of Priority 1: Funding 
Eligibility to provide that an applicant must implement a GEAR UP 
project in ``at least six high schools'' rather than simply ``multiple 
high schools.''
    Comment: None.
    Discussion: Proposed Priority 1 states that an applicant must have 
received a GEAR UP project grant that supports activities in ``at least 
six high schools,'' but does not define ``high school'' or what grade 
span would be considered ``high school.'' Through internal Department 
deliberation, we concluded that it is necessary to clarify that, for 
the purposes of these priorities, a ``high school'' must be a school 
that serves students in grades 9-12. This clarification is needed first 
to ensure that grantees will be able to provide participating students 
with GEAR UP services for the entirety of the project. In addition, 
participating students in high schools that serve grades 9-12 will be 
able to receive the required financial counseling for four years in 
conjunction with their savings accounts. By serving students in the 
ninth grade who then may transfer to a non-GEAR UP high school for 
grades 10-12, many of these counseling benefits would be lost.
    Change: We have revised paragraph (a) of Priority 1: Funding 
Eligibility to provide a note clarifying that for the purposes of this 
notice of final priorities, a high school must be a school that serves 
students in grades 9-12.

Savings Account Matching Contributions

    Comment: Several commenters requested that the Department revise 
Priority 2 and increase the proposed Federal matching contribution of 
$10 per month so as to provide greater incentives for GEAR UP students 
to go on to college and for families to save for their children's 
college expenses.
    One commenter recommended that between the $200 per student seed 
money and the GEAR UP matching funds, the total amount of possible 
Federal funds deposited into each account be a number that is easy for 
a family to remember, such as $1,500 or $2,000.
    Another commenter recommended that the Department provide 
flexibility in the amount of Federal matching funds that would be 
provided based on grantee determination of the needed family 
contribution. This commenter noted that having a variety of minimum 
matching rates would impact the evaluation but believes that the size 
of the treatment group should allow for such flexibility and help to 
answer the question of what level of match optimizes families' savings 
contributions. Another commenter recommended that the Department not 
establish a monthly match based on a fixed amount of family savings but 
instead focus on regular savings because, according to the commenter, 
research suggests this approach would be more effective in promoting 
accumulated savings.
    Discussion: We agree with some of these comments.
    Having examined the level of GEAR UP program funding that we expect 
to be available for this demonstration project, we believe that we can 
offer greater financial incentives for GEAR UP students or their 
families to save money for postsecondary education than the $10 per 
month Federal match that we had proposed. We therefore are revising the 
priority to specify that grantees will be able to match up to $25 per 
month. Thus, rather than the maximum of $120 of GEAR UP funds per year 
(and up to $480 over the maximum four years of savings) that we had 
proposed, grantees now will be able to provide each GEAR UP student a 
contribution of up to $300 per year (and up to $1,200 over this four-
year period). The increase in the Federal matching contribution should 
increase the incentive for families to save for college and result in 
higher levels of family savings. We believe that $1,200 over four years 
will also give students and families a clearer amount of total seed and 
match funding available. While we appreciate one commenter's suggestion 
that matching amounts vary based upon a determination of family need, 
we do not think this approach is appropriate here. Varying the match 
would increase complexity for administrators, who would have to develop 
a needs-analysis formula and find ways to communicate these differences 
to students and families clearly. Beyond having grantees make available 
this fixed amount, the Department believes that providing other options 
for families to receive further deposits of GEAR UP funds beyond those 
specified in Priority 2 adds too much complexity to the administration 
of the project.
    Changes: We have revised paragraph (b)(2), of Section I of Priority 
2: College Savings and Financial Counseling to increase the Federal 
matching contribution from up to $10 per month to up to $25 per month, 
for a maximum of $300 in Federal matching funds each year for four 
years.
    Comment: One commenter recommended the Department lower the match 
rate and raise the Federal matching contribution cap to maximize 
savings contributions. The commenter stated that families would be more 
motivated to save if the Department raised the amount of GEAR UP funds 
available for these savings accounts but lowered the match percentage 
from the 50 percent that we had proposed. The commenter offered this 
approach, stating that it would increase the amount of funds families 
would have available for college savings without greatly increasing the 
level of commitment of GEAR UP funds.
    Discussion: The Department agrees with one of the recommendations 
in the comment. The match cap has been raised to $25 per month for a 
maximum of $300 in Federal matching funds each year for four years. The 
Department is not lowering the match rate, one dollar of GEAR UP 
contribution to the savings account for every dollar of student or 
family contribution, because we do not believe that lowering the match 
rate will result in increased non-Federal savings contributions.
    Changes: The Federal matching contribution cap has been increased 
to $25 per month.
    Comment: One commenter recommended revising the proposed priorities 
to allow grantees the option of matching family deposits in excess of 
the Federal limit, thereby providing an opportunity to leverage other 
incentive programs, such as savings match programs through a Section 
529 plan.
    Discussion: While we agree that offering more matching funds would 
provide a greater incentive to save, the demonstration project is 
designed to determine the impact of a fairly specific set of college-
savings-oriented services and the provision of a set amount of Federal 
funds as a match for private savings accounts. Grantees actively 
seeking to encourage additional family deposits in college savings 
accounts by offering a match against other non-Federal contributions 
will interfere with the project evaluation. Therefore, the amount of 
matching must be kept consistent for all participating GEAR UP 
grantees.
    Changes: None.
    Comment: One commenter recommended that the Department provide 
greater funding to accounts of families with fewer resources. The 
commenter noted that while this approach presents unique challenges, 
such as asking for a child's Social Security number in order that the 
child

[[Page 5042]]

participates in the demonstration, this effort is needed if the 
demonstration is serious about policy influence.
    Discussion: The Department does not agree with the commenter. We 
believe that existing eligibility requirements of the GEAR UP program 
ensure that large numbers of participating students will be low-income 
and first-generation college students. Moreover, changing the amount of 
matching funding based upon additional factors will call into question 
the reliability of the results of the project, add complexity to 
administering the program, and make it harder to communicate to 
students and families about the level of available funding. Therefore, 
we want to offer a consistent level of seed and match funding for all 
participating students.
    Changes: None.
    Comment: One commenter asked that we clarify whether the family's 
contribution to its college savings account must be made monthly in 
order to receive the full Federal contribution. Specifically, the 
commenter asked whether the project would contribute the full monthly 
level of matching contributions if the family had over-matched in one 
month and under-matched in another, but averaged at least $25 per 
month. The commenter also asked the Department to consider other 
savings models, such as permitting a family to receive the maximum 
amount of the GEAR UP contribution to the federally funded college 
savings account so long as it has made the required match at any point 
over this period.
    Discussion: A student or family that has over-matched its account 
in one month and under-matched in another would not be able to have the 
amount of its over-matches count for future monthly matches, including 
any catch-up period contributions. One of the goals of the 
demonstration project is to encourage students and families to 
regularly save for college. Allowing the amount of over-matching in one 
month to count toward the matching amount in subsequent months would 
discourage regular saving and make the program more complex and costly 
to administer.
    The Department appreciates the comment that the match be available 
to families so long as the required contribution is made at any point 
over this period. While we think that families should have some 
flexibility and opportunities to make up for lost contributions, those 
opportunities should not be provided indefinitely. That is why we are 
requiring grantees to provide families a quarterly catch-up period of 
two weeks. We believe these frequent catch-up opportunities balance the 
desire to give families the opportunity to make up for missed 
contributions with a project goal of providing regular deadlines that 
encourage savings.
    Changes: Paragraph (p) in Section I of Priority 2 has been revised 
to clarify that a family that over-matches the Federal account in any 
month may not receive credit for the amount of over-match in any future 
month, including a catch-up period, for purposes of meeting that 
month's GEAR UP program matching contribution.
    Comment: Rather than offer monthly matching contributions of GEAR 
UP funds, a number of commenters recommended that the Department 
instead add to accounts when certain levels of private savings are 
achieved, provide bonuses when families have added to accounts for 
perhaps six consecutive months, or, after making the initial deposit of 
GEAR UP funds, provide periodic deposits of Federal funds when students 
reach particular ages. One commenter said that these approaches would 
both be much simpler to implement than our proposal and that the latter 
option has proven successful in the United Kingdom. The commenter 
further recommended that rather than contributing Federal funds through 
matching, the Department should consider providing Federal funds for 
student accounts as behavioral incentives at certain milestones for 
financial or educational achievement. The commenter stated that this 
approach might be a more effective way to motivate student behavior and 
that research suggests that the approach also might better encourage 
long-term savings compared to matching monthly deposits.
    Discussion: While we appreciate the summary of research presented 
by the commenter, the Department does not agree that the proposed 
approaches are feasible for the purposes of this demonstration project. 
We think matching savings account contributions when they occur 
provides immediate positive feedback to students and families that will 
encourage additional saving. Moreover, we think that additional 
benefits, such as bonuses for repeatedly saving, will make accounts 
more complicated and costly to administer and harder for students and 
families to understand. As for providing matches based upon student age 
or other milestones, we think that including these other benefits would 
likewise make administering the accounts more complicated and make it 
too burdensome for grantees to manage them. Therefore, we are not 
including additional matches for meeting other milestones.
    Changes: None.
    Comment: One commenter recommended that grantees be able to raise 
funds for savings accounts from community and philanthropic 
organizations, but it cautioned that in this case there should be 
restrictions on the use of these funds for activities that are related 
to education or finance, and supported by adequate documentation.
    Discussion: Proper evaluation of the demonstration project requires 
that students served by all project grantees are subject to the same 
maximum matching and seeding amounts. Proper evaluation also requires 
that grantees not solicit or otherwise seek funds from sources other 
than the student's family and friends to contribute to the student's 
non-Federal account. Doing otherwise could compromise the demonstration 
project evaluation.
    Changes: Paragraph (c) in Section I of Priority 2 has been revised 
to clarify that a grantee may not solicit or raise money from non-
Federal sources as additional contributions to the student's non-
Federal college savings account.

Requirements for Savings Accounts

    Comment: Several commenters emphasized that, in order to meet the 
needs of their communities, the Department should allow grantees 
flexibility in the design of their programs and thus not require all 
grantees to use the same type of savings account.
    One commenter recommended that in providing such flexibility, the 
Department should require that all accounts have certain minimum 
qualities, such as making the accounts accessible, safe, and effective, 
avoiding excessive fees to students, and being easy to use. The 
commenter also stated that this approach allows for some uniformity 
while also providing variation for research purposes, and added that if 
the Department decides to require a single account type, it should not 
use 529 savings plans. The commenter stated that despite their positive 
features, these plans have more onerous data disclosure requirements 
than alternative account models and thus would exclude more students 
than necessary from participation.
    Another commenter, urging the Department to maintain flexibility in 
the type of account the applicant would select, noted that 529 plans 
generally cannot be accessed by deposits into local bank branches and 
may prove difficult to use by unbanked low-income households since in-
person deposits would be very difficult. The commenter

[[Page 5043]]

noted that 529 accounts often have minimum deposit requirements, often 
in the $15 to $25 range, and require deposits to be made online or by 
mail; the commenter stated that these considerations would obstruct the 
use of these 529 accounts by many low-income families, particularly 
since the commenter's experience is that the ability to make small cash 
deposits is very important for this population.
    On the other hand, a number of commenters recommended that we have 
grantees use existing 529 savings plans. One commenter noted that these 
plans provide a ready common infrastructure designed to support college 
savings that is not readily available in the case of banks or credit 
unions, that they would be available to students and parents after the 
end of this demonstration project, and that experience in one State 
demonstrates that use of a Section 529 account by all participating 
students has made it possible to monitor savings patterns and 
performance very accurately. The commenter also noted that, for this 
demonstration project, these Section 529 savings plans would need to be 
flexibly implemented, and urged the Department to clarify that States 
may work with the 529 providers to craft special arrangements for 
account opening, account-holder information requirements, and account 
structure that are specific to the demonstration project.
    Finally, two organizations that work with members to enhance 529 
plans submitted joint comments that, among other things, stated that 
the 2004 studies referenced in the NPP with regard to income bands and 
typical 529 plan participation are outdated and do not reflect efforts 
made in recent years to expand knowledge about and participation in 529 
plans. In this regard, the commenters provided copies of two reports 
provided to the United States Treasury in February 2010 about 529 plans 
and efforts of those implementing the plans to broaden their reach.
    The commenters also stated that 529 plans do encourage savings by 
those with modest incomes and that virtually all of these plans have 
required contributions of as little as $10 to $25 per month; have a 
wide variety of savings instruments, including very conservative ones; 
and low-fee options. The commenters said that they would defer to the 
State applicants about the specifics of implementing the Department's 
proposed study and the logistics of funding of the GEAR UP 
supplementary college savings accounts with required criteria and 
characteristics, particularly privacy aspects, but asked the Department 
to remain open to allowing a variety of funding vehicles in the study. 
The commenters emphasized that the greater the flexibility that is 
available for implementation efforts, the greater the chances of 
success. The commenters also said that the State educational agency 
(SEA) in each State should work with the State's 529 plan wherever 
possible, since by utilizing 529 plans for this purpose, it will take 
advantage of an existing infrastructure that administers college 
savings programs and in many instances administers a matching grant or 
other type of program for law and moderate income families.
    Discussion: We appreciate these comments, but we believe it is 
important to provide appropriate flexibility to grantees to choose the 
type of savings vehicle that works best for them and that they believe 
will work best for participating students and their families. As we 
proposed, the Department is providing each grantee flexibility to 
determine which type of savings program administration they will use, 
provided that the grantee ensures that:
    (a) It has a partnership with a financial institution that will 
provide GEAR UP students starting in ninth grade with an account that 
allows saving in a federally insured deposit account that accumulates 
interest, an account composed of U.S. Government Treasury securities, 
or a fully guaranteed savings option within a Section 529 college 
savings plan. Accounts may also provide students and families with 
investment options that present risks in exchange for the potential for 
larger returns but that are in no way guaranteed.
    (b) Federal funds are maintained in a single ``notional'' account 
that is in fact separate from any non-Federal funds. The amount of 
Federal GEAR UP seed and matching funds and accrued interest earned by 
each student is tracked, each student is permitted to see both the 
Federal funds and associated interest earned as well as any non-Federal 
funds and interest earned in a single account statement, and Federal 
funds are invested only in federally insured vehicles or U.S. Treasury 
securities.
    Even with these conditions, grantees will have many different types 
of accounts to choose from, such as 501(c)(3) plans and 529 plans.
    With regard to the comment raising concerns about 529 plans, the 
Department believes that the requirements outlined in the priority will 
protect against those concerns such that plans that have the flaws the 
commenter identified would not meet the requirements for selection. 
Similarly, we are confident that these requirements do not preclude 
grantees from using 529 plans but instead provide grantees with 
sufficient flexibility to choose what works best for them.
    Changes: None.
    Comment: One commenter from an association of financial 
institutions offered to leverage its member bank and banking contacts 
to help identify institutions interested in participating in the 
project, should the Department select savings accounts as an eligible 
account type.
    Discussion: The Department appreciates the commenter's interest in 
partnering with grantees to administer accounts. However, the 
Department thinks it is important that grantees have flexibility in 
selecting the provider that is best for them, and so we cannot 
recommend a specific type of account or provider. We do encourage the 
commenter to work with applicants and grantees to determine if their 
partnership would be appropriate.
    Changes: None.
    Comment: One commenter suggested that the Department allow for, and 
even encourage, maximum flexibility and experimentation across many of 
the dimensions of the accounts specified in Proposed Priority 2.
    Another commenter offered recommendations about the way the savings 
accounts should be set up, suggesting for example that (1) the basic 
savings accounts be interest bearing with no minimum balance and no 
fees, (2) parents be able to invest funds in a certificate of deposit 
or investment product such as a mutual fund, (3) accounts be in the 
student's name so that assets in the accounts not affect family 
eligibility for Medicaid and Temporary Assistance for Needy Families 
(TANF), and (4) withdrawals for unauthorized purposes result in loss of 
GEAR UP matching funds.
    Another commenter stated that while flexibility was important, 
there are a number of advantages of structuring the saving accounts 
using a custodial or trustee model and holding all funds under a single 
tax identification number. These advantages include: accounts can be 
opened automatically and universally and without the need for Social 
Security number or parental consent, funds are protected from early or 
non-qualified withdrawals, account earnings accrue tax free without the 
need of parents to report these earnings, and assets are not held in a 
family's name, thus avoiding asset tests for public benefits 
eligibility.

[[Page 5044]]

    Yet another commenter recommended that the Department have grantees 
structure their accounts and projects so that (1) they are free of any 
fees on the students or the custodians, (2) all funds are insured by 
the FDIC, (3) there is no minimum balance or deposit amount, (4) 
parents and students have a range of deposit options, (5) there is 
strong competency in the management and exchange of data between the 
projects and financial institutions, (6) while making available limited 
withdrawals, families are provided access to their funds in the case of 
an emergency, and (7) families have access to account balances through 
an online system.
    Discussion: The Department acknowledges the recommendations 
received on the structure and implementation of the savings accounts. 
We agree that allowing grantees to tailor account characteristics to 
their preferred circumstances could have some benefits, and, as 
discussed previously, the Department has proposed to provide 
flexibility in choosing the type of savings account administration 
program provided certain core requirements are met. At the same time, 
we need to limit flexibility in other areas such as the amount of 
seeding or matching funds to ensure that the demonstration project is 
evaluating a specific set of college savings-oriented services. The 
responsibility for designing and managing these accounts, within the 
specified guidelines, rests with the State GEAR UP grantee. Successful 
applicants will propose an implementation plan that is most effective 
for their State and target population.
    Changes: None.
    Comment: A number of commenters recommended the elimination of the 
requirement that savings account administrators establish and maintain 
parallel accounts for each student, one for GEAR UP funds and the other 
for family contributions.
    One commenter stated that the family contributions should instead 
be held in sub-accounts of the single master account, meaning that 
there would be no need for parallel accounts since the Federal seed 
deposit and match funds could be accurately and easily tracked using a 
ledger system.
    Another commenter stated that while some college savings account 
programs use the dual-account approach the Department had proposed, 
others use software to track and accrue savings matches virtually while 
keeping the matching funds in a pooled account. Under this approach, 
when it is time for qualified withdrawals, the appropriate amount is 
withdrawn from the pool and paid to the institution of higher education 
or other vendor. The reduction in the number of separate accounts 
creates large decreases in administrative burden.
    Similarly, another commenter stated that to decrease administrative 
burden, the Department should make use of notional accounts in which 
the Federal funds would be placed in an account that is parallel to the 
account holding non-Federal funds. The commenter noted that while the 
Department might be legally required to use this arrangement, given the 
enormous number of potential savings accounts and the fact that it 
could not be a viable method of account delivery in the long term, the 
commenter urged the Department to use a single account design that 
would use software to track and account for Federal and non-Federal 
deposits.
    Discussion: We appreciate these comments. While we agree that 
eliminating the requirement for grantees to maintain parallel accounts 
for students would reduce by half the number of accounts, we think the 
provisions in Priority 2 that concern use of Federal dollars deposited 
into these accounts make parallel accounts preferable. In order to make 
sure Federal dollars are properly invested, they must be invested in 
federally insured vehicles or U.S. Treasury securities. Were we to 
require only a single account type, non-Federal matches would be 
restricted to similar investments, which would restrict savings 
options. Moreover, GEAR UP funds deposited into these accounts that are 
unused will need to be returned to the Department, something that would 
be very hard to manage with a single account for deposits of both 
Federal GEAR UP funds and private savings. Therefore, we think it is 
necessary that the two-fund structure be maintained.
    Changes: None.
    Comment: One commenter recommended establishing a process that 
allows for quick and easy deposit of funds to a student's savings 
accounts. Another commenter recommended that the Department give 
priority to applicants that provide a convenient or automatic way for 
families to make deposits into students' accounts, while another 
commenter provided research findings that automatic enrollment in a 
savings account yields much greater and sustained participation than 
having individuals open accounts on their own.
    However, another commenter stressed its concern that auto-
enrollment without parental consent would be less effective for 
achieving both the needed parental buy-in to college savings and the 
student enthusiasm for college that would come from requiring parental 
engagement, such as a requirement that parents expressly ``opt-in'' to 
the project. And another commenter stated that while 529 accounts offer 
convenience and simplicity, requiring grantees to use these accounts 
may (1) lead to the removal of other attractive features of accounts, 
such as the need for families that already had savings accounts to open 
and add deposits to another, and (2) create much greater administrative 
burden that could dampen support by those administering the project.
    Discussion: The Department believes that making it easier for 
students to enroll in the savings accounts, particularly by doing so in 
an automatic or near-automatic fashion, is important for encouraging 
participation and savings. Therefore, we agree with commenters 
recommending easy enrollment and note that proposed Priority 2 allows 
quick and easy deposit of funds to a student's savings account. Each 
successful applicant will be required to ensure that individual 
deposits can be made easily and at no cost to the student, the 
student's parents, or others who make deposits on the student's behalf. 
Consistent with the proposal, a student or parent would be able to 
deposit funds online, in person at convenient locations, or by mail. 
While the Department agrees that more engaged parents may be more 
likely to contribute to savings accounts and build enthusiasm for 
college, we think that requiring an express ``opt-in'' would make it 
more complicated to enroll and participate and could depress usage. 
Instead, we encourage grantees to work with families to build their 
interest and knowledge in the program, including through required 
financial counseling.
    Changes: None.
    Comment: One commenter recommended that the Department provide a 
strong preference for ensuring that grantees work with a single 
financial institution that can provide accounts with uniform terms and 
conditions, and at low cost, across the State. The commenter stated 
that such an approach would promote a better test of a college savings 
plan that included all students, would decrease administrative burden 
throughout the project, limit variability in savings accounts for 
administrative and evaluative purposes, and facilitate tracking and 
submission of more complete and accurate data about the projects.
    Discussion: We agree with much of this comment. With respect to 
requiring a single financial institution, we recognize that for many 
grantees a single

[[Page 5045]]

partner may be sufficient and indeed even preferable to using multiple 
institutions. However, we also recognize that such a structure would 
not necessarily work in a larger State or in other circumstances. 
Therefore, we encourage grantees to use their professional judgment 
when determining how many financial partnerships they need to set up 
the college savings accounts for participating students in their 
States.
    Changes: None.
    Comment: One commenter recommended that the Department have 
grantees invite account personnel to attend regular meetings of parents 
at which they offer envelopes for mailing deposits and other ways to 
encourage savings.
    Discussion: While the Department thinks it is important that 
grantees have flexibility in deciding how counseling to parents should 
be provided, this requirement would not preclude account personnel from 
providing some or all of this assistance.
    Changes: None.
    Comment: While fully supporting the Department's proposal to 
require that grantees provide families with automatic enrollment and 
encouragement of automatic savings deposits as useful design elements 
to encourage saving for a student's college education, a commenter 
recommended that the Department also consider a number of other 
behavioral design elements. While these recommendations are addressed 
under the next topic headings, the commenter recommended that under 
Priority 2, the Department require each State grantee to secure 
technical assistance in designing behavioral interventions that suit 
the particular implementation of this project and that are customized 
to the operational constraints of the participating schools, account 
administrators, and the financial situation of participating students 
and their families.
    Discussion: The Department does not agree with this comment. 
Grantees may certainly design their projects to provide various 
approaches that they believe will be effective in encouraging families 
to focus on the importance of saving for college, and grantees may use 
GEAR UP funds to secure any desired technical assistance. However, 
while we appreciate that different behavioral designs may result in 
interesting variations in savings accounts, proper evaluation of the 
accounts requires consistent administration across grantees. Adding in 
such behavioral design elements would thus further complicate the 
evaluation and is not recommended.
    Changes: None.

Financial Counseling and Behavioral Interventions

    Comment: One commenter recommended that the Financial Counseling 
component be given ``the same weight'' as the Student Savings Account 
component. We understand the commenter to be asking that the Department 
require grantees to implement both the Financial Counseling and Savings 
Account components of Priority 2.
    Discussion: The Department agrees with this comment and notes that, 
as proposed, Priority 2 requires grantees to implement both the 
Financial Counseling component and the Student Savings Account 
component. The College Savings Accounts Research Demonstration Project 
has two main parts: (1) establishing, operating, and having students 
participate in college savings accounts and financial counseling, and; 
(2) assessing the effect of providing the college savings accounts and 
related financial counseling to students and their parents. Both of 
these parts are in the absolute priority published in this notice of 
final priorities and incorporated by reference in the notice inviting 
applications for the College Savings Account Research Demonstration 
Project published elsewhere in this issue of the Federal Register. 
Therefore, successful applicants will need to address both the 
Financial Counseling and Student Savings Account components.
    Changes: None.
    Comment: One commenter expressed concern that students may be 
penalized when parents are unable or unwilling to attend required 
parent financial counseling sessions. The commenter recommended that 
counseling for parents be optional and that we provide incentives to 
parents who participate.
    Discussion: Grantees will be expected to find and utilize the most 
effective methods at participating schools for reaching out to and 
counseling parents. While grantees are required to provide ``at least 
biannual counseling meetings for parents,'' they are not required under 
Priority 2 to meet specific attendance figures. Therefore, students 
whose parents do not attend the session will not be penalized.
    Changes: None.
    Comment: One commenter expressed concern that individually targeted 
financial counseling may be too burdensome for projects to implement 
successfully with existing resources. This commenter recommended 
partnering with outside organizations, such as Consumer Credit 
Counseling Services, to help provide such counseling.
    Discussion: We agree that grantees should make use of existing 
resources, both theirs and those of outside organizations, to provide 
financial counseling, and we encourage grantees to seek partners that 
can help them in this effort. However, we do not feel that it is 
necessary to include a statement to this effect in the final priority 
as applicants will no doubt craft a counseling plan that best meets 
their needs.
    The comment prompted us to examine paragraph (g) in Section I of 
Priority 2, which, as proposed, did not clarify whether all students in 
the treatment group need to participate in the required financial 
counseling. We have revised the provision to clarify that all students 
must be included.
    Changes: Paragraph (g) of Priority 2 has been revised to clarify 
that all students in the treatment group must receive the required 
financial counseling.
    Comment: A commenter recommended adding a requirement that 
financial counseling, particularly for parents, be conducted in 
languages other than English, while another recommended that the 
Department encourage applicants to work with experienced partners in 
the delivery of culturally and linguistically appropriate financial 
education and counseling for parents and families.
    Another commenter, noting the importance of financial counseling, 
recommended that each State grantee implement financial counseling 
using curricula that are consistent and standardized across sites and 
that are focused on helping GEAR UP students to increase their savings. 
The commenter indicated that evaluation results with respect to the 
measure and impact of financial counseling would thereby be as valid 
and reliable as possible. In order to promote efficiencies and 
appropriate evaluation results, the commenter also emphasized the need 
of grantees, in States that mandate a financial education curriculum, 
to coordinate with that curriculum in the design phase of their 
projects.
    Discussion: While we recognize the need to provide linguistically 
and culturally appropriate financial counseling, we do not feel that it 
is necessary to require this for all participating projects. Grantees 
are expected to use their professional judgment and conduct teaching 
and

[[Page 5046]]

counseling that best meets the needs of parents and students, including 
those who need financial counseling in languages other than English. We 
have no doubt that in States that mandate a financial education 
curriculum, grantees will want to have participating schools and LEAs 
coordinate their financial counseling with this curriculum. However, we 
do not think it is appropriate to mandate that each grantee under this 
demonstration project use a particular curriculum that is consistent 
and standardized across school sites.
    Changes: None.
    Comment: One commenter recommended a change to Proposed Priority 2 
to allow States to obtain technical assistance on the design of 
behavioral interventions that would help to encourage regular and 
greater savings for college, such as social support groups or the 
disbursement of matching funds through prizes that suit the particular 
implementation of the college savings accounts research demonstration 
project.
    Discussion: We agree with this recommendation but do not believe a 
change to Priority 2 is needed to accomplish the goal. The Department 
realizes there is an array of behavioral design interventions that may 
encourage regular deposits into savings accounts; we, therefore, 
encourage States to design their college savings account demonstration 
projects to include viable interventions that are likely to maximize 
college savings for students.
    Changes: None.
    Comment: One commenter recommended that, in order to better 
encourage parents to add deposits to their children's college savings 
accounts, grantees should consider activities such as sending reminder 
letters and emails, preferably early in the month rather than at the 
end of the month; providing reminder magnets; and communicating to them 
what other families are doing or saying, e.g., the number of families 
that provided regular contributions in the preceding year or months.
    Discussion: We agree with the commenter that grantees should reach 
out to parents to provide them with reminders about saving. We believe, 
however, that States should be given flexibility to determine how this 
should be carried out. Therefore, we are not adding a specific 
requirement.
    Changes: None.

Financial Education

    Comment: One commenter suggested that the Department encourage 
grantees to conduct financial education in multiple formats to ensure 
that the most effective method is used. The commenter also suggested 
that one of the required formats include classroom lessons during the 
school day, allowing GEAR UP to leverage the work of States that 
already mandate financial education in the schools.
    Another commenter emphasized that financial literacy and college 
savings accounts are not enough to overcome barriers, particularly for 
first-generation college students, in areas such as preparing for 
college academically and financially, how to apply to college, and how 
to choose the right college and career path. The commenter urged the 
Department to pursue high-impact mentoring, information about academic 
and career preparedness, and the engagement of parents, counselors, 
teachers, and other stakeholders as important interventions in addition 
to college savings accounts. The commenter urged the Department to 
address these interventions--including through use of the Internet and 
online tools--as well as college savings accounts in order to provide a 
more robust set of outcomes.
    Discussion: While we agree with the commenter that multiple 
educational formats may be more effective than a single format in 
reaching varied audiences with differing learning styles, we do not 
feel it necessary to mandate this practice. We believe that grantees 
will want to use educational formats that work best for their 
particular audience, relying on current and proven educational 
research. We also agree that the availability of savings accounts for 
GEAR UP students and promotion of financial literacy are likely 
insufficient by themselves to overcome all barriers. However, we note 
that all students participating in this program will also be receiving 
all regular GEAR UP services. By statute, GEAR UP grantees are required 
to provide participating students with a variety of mentoring, 
outreach, and supportive services (as referenced in the last sentence 
of paragraph (g) in Section I of Priority 2). These services will give 
students some of the mentoring and information assistance mentioned by 
the commenter, but we think much of what the commenter seeks requires a 
vehicle broader than this demonstration project.
    Changes: None.
    Comment: One commenter recommended that the Department help to 
prepare grantees to meet the financial education requirement by 
offering ongoing training to grantees, including one-on-one advising as 
needed; providing help to grantees to identify and select quality 
educational financial curricula; and monitoring financial education 
delivery over time. The commenter also recommended that the Department 
require financial education to be delivered in the classroom rather 
than after school and urged that it be coordinated with any financial 
education already required in grantees' States.
    Noting the proposed requirement for individually targeted 
financially counseling, another commenter stated that many grantees 
would not have existing capacity to provide this higher intensity 
service and that this counseling would be very costly. The commenter 
urged the Department to invest additional resources in providing needed 
grantee training and to permit grantees to provide this counseling in 
partnership with outside organizations with the capacity to assist.
    Discussion: The Department agrees that extensive and ongoing 
technical assistance on important aspects of project implementation is 
crucial to helping grantees establish and manage savings accounts and 
that support is particularly important for those with no experience in 
this area. To address these concerns, the Department plans, among other 
things, to provide technical assistance training at national GEAR UP 
conferences on important aspects of project implementation. These 
aspects include general considerations that should be taken into 
account when implementing these types of savings accounts. The 
Department is also working with partners at the Treasury Department, 
the NCUA, and the FDIC to develop materials that will give applicants 
key information about the implementation of college savings accounts.
    While we appreciate the suggestion that the Department require 
grantees to provide financial counseling in the classroom rather than 
after school, we do not think it is appropriate to require this. Some 
schools may not be able to incorporate it into classroom time, and such 
a requirement could create problems with finding appropriate 
instructors. Likewise, we do not believe that an explicit requirement 
is necessary for coordinating with any financial education already 
required in grantees' States. The Department notes that, in their 
applications under this demonstration project, potential grantees will 
describe project services that are most appropriate to the needs of the 
target population and that maximize the effectiveness of project 
services through the collaboration of appropriate partners.
    Changes: None.

[[Page 5047]]

Catch-Up Options

    Comment: A number of commenters recommended that the Department 
eliminate or reduce the catch-up period. One commenter stated that the 
proposed catch-up provision would add costs and complexity to the 
project and encourage delays in making deposits. Instead, the 
Department should consider requiring small regular deposits, which 
makes saving for college more manageable and ritualized.
    Another commenter recommended that we make this provision more 
flexible, both to reduce project complexity and to give students the 
greatest chance to acquire the maximum amount of Federal deposits.
    Discussion: The Department understands that lower- and moderate-
income families sometimes have to make tough financial decisions that 
can seriously impede their ability to save for college regularly. We 
want to provide these families the flexibility to continue to receive 
matching funds by affording parents a two-week catch-up period. We 
think two weeks is an appropriate amount of time because it gives 
students and families ample opportunity to make catch-up contributions 
but does not provide so long a time period as to create a disincentive 
to make regular contributions to their children's college savings 
accounts.
    Changes: None.
    Comment: One commenter recommended offering additional annual or 
four-year opportunities to catch up on required deposits. Another 
commenter recommended that we clarify the amount of catch-up that is 
needed when families have over-matched in certain months but under-
matched in others.
    Discussion: The monthly savings component of the project is 
intended to instill a habit of consistent saving and methodical 
planning for education expenses. While we understand that family 
incomes may at times be inconsistent, this project aims to help 
encourage participants to regularly save money towards the costs of a 
college education. We are concerned that offering additional annual or 
four-year opportunities to catch-up will deter families from saving 
habitually.
    With regard to the request for clarification about a family that 
over-matched in any month, as we have expressed in response to a prior 
comment, we believe that given the project's focus on promoting regular 
savings the amount of a family's overmatch should not be available as a 
credit for a month in which the family did not meet its match amount. 
Thus, we also believe that the family should still need to provide 
catch-up contributions for any months in which it did not provide any 
contributions and that this should be the result regardless of how much 
a family over-matched in a given month. We have clarified Priority 2 in 
this regard.
    One of the goals of the demonstration project is to encourage 
students and families to regularly save for college. Allowing over-
matching in one month to count in subsequent months would discourage 
regular saving and make the program more complex and costly to 
administer.
    Changes: Paragraph (p) in Section I of Priority 2 has been added to 
clarify that a family that over-matches the Federal account in any 
month may not receive credit for the amount of the over-match in any 
future month, including a catch-up period, for purposes of meeting that 
month's GEAR UP program matching contribution.

Account Administrator

    Comment: One commenter sought clarity on the role of the account 
administrator.
    Discussion: Under Priority 2, each successful applicant must 
designate a savings account administrator to hold the account funds, 
accept deposits, and issue qualified withdrawals. The account 
administrator must be a federally regulated or State-regulated 
financial institution, such as an investment firm that manages a 
State's 529 plan or a federally insured bank or credit union that 
partners with the State to administer GEAR UP savings accounts.
    Changes: None.
    Comment: One commenter requested that we explain the difference 
between the account administrator and savings account trustee over the 
duration of the project and beyond the five-year grant period. The 
commenter also noted that students may hold their accounts for up to 
six years following high school graduation, meaning that the account 
administrators and trustees would need to serve the accounts (and 
presumably report data about them) for up to 11 years. The commenter 
expressed concern that few potential account administrators and 
trustees will be willing to provide these services for this length of 
time, and that the administrative fees they are paid will last only 
five years.
    Discussion: Under Priority 2, each successful applicant must 
designate a savings account administrator and a savings account 
trustee. The savings account administrator is responsible for holding 
the account funds, accepting deposits, and issuing qualified 
withdrawals. The savings account trustee is responsible for managing 
the account funds and approving withdrawals and other account 
activities.
    The Department appreciates that accounts will have to be 
administered for a longer period of time than the grantee's project 
period. But this extended timeframe is necessary to ensure that 
students are able to access their accounts throughout their time in 
postsecondary education. While we appreciate that this extended 
timeframe does place some burden on trustees and creates some 
uncertainty about how applicants and grantees would budget for these 
trustee costs, we think that the management of such accounts may become 
easier as families stop making contributions and instead begin 
withdrawing funds. In their applications under the program, potential 
grantees should budget up-front for all years for which the services of 
the account administrator and trustee will be needed. Moreover, 
grantees may budget for, and charge GEAR UP funds for, the reasonable 
and necessary costs of managing the savings accounts. Thus GEAR UP 
program funds will be available to pay the reasonable and necessary 
costs that the trustees can be expected to incur.
    Changes: None.

Savings Account Ownership

    Comment: One commenter sought clarity on the ownership structure of 
the student savings accounts. The commenter stated that whether the 
account is owned by the trustee, the student, or the student's family 
will affect account administration and families' funding decisions. The 
commenter recommended that the trustee own both the student account and 
the match account.
    Discussion: The Department agrees with the commenter's 
recommendation. Both the students' account containing Federal funds and 
match account with non-Federal contributions will be owned by the 
account trustee. Participating GEAR UP students will be named as 
beneficiaries. This is the same structure banks use for minors' savings 
accounts.
    Changes: None.

Account Withdrawals

    Comment: One commenter sought clarification on what constitutes a 
``qualified withdrawal.'' The commenter asked, for example, whether the 
cost of an enrollment in preparatory course for a college entrance exam 
or the purchase of a computer would be a qualified

[[Page 5048]]

withdrawal, or whether grantees may develop their own rules that align 
with the specific requirements of the account types they select.
    Another commenter recommended that the program follow the 
guidelines established by 529 programs for what constitutes a qualified 
withdrawal. Yet another commenter recommended that, to reduce 
administrative complexity, we eliminate provisions for reducing the 
prior match of GEAR UP funds for unqualified withdrawals from the 
student's account.
    Another commenter urged the Department to consider reasonable 
restrictions on the purposes of withdrawals, perhaps with exceptions 
for emergencies, or limiting withdrawals to only a certain number of 
times per year. According to this commenter, surveys and focus groups 
of low-income individuals have suggested that these approaches may help 
encourage college savings.
    Discussion: Under Priority 2, students or their parents may 
withdraw Federal GEAR UP funds from the student savings accounts in 
which grantees have deposited them upon approval of the savings account 
trustee. Under paragraph (d) in Section I of Priority 2, withdrawals of 
GEAR UP funds may only be for qualified purposes, which are (1) funds 
provided to an institution of higher education on behalf of a student 
upon that student's enrollment in an HEA title IV-eligible institution 
of higher education (which includes colleges and universities as 
defined by the HEA) for the purposes of paying for tuition, fees, 
course materials, living expenses, and other covered educational 
expenses as defined in the HEA, or (2) funds the student or parent need 
for such costs that would not be provided directly to the IHE. In 
addition, we have added to paragraph (d) permission to use funds in the 
Federal account for other costs related to postsecondary education that 
the account trustee, based on instructions from the grantee, determines 
to be appropriate. At the grantee's discretion, these additional 
qualified purposes costs could include such items as the cost of 
enrollment in a preparatory course for a college entrance examination 
or the purchase of a computer required for college.
    Successful applicants also will establish rules for the withdrawal 
and transfer of non-Federal funds, which must include a requirement 
that the account trustee oversees any withdrawal or transfer of non-
Federal funds. In terms of requests for additional restrictions on 
withdrawals or limiting the number of withdrawals allowed per year, the 
Department thinks that the restrictions placed on withdrawals of the 
Federal funds are appropriate. For the non-Federal matching funds, 
however, the Department does not think we need to establish additional 
restrictions since the loss of previously matched Federal funds that 
would accompany an unqualified withdrawal should be sufficient to 
dissuade this from often occurring. If, however, States wish to provide 
additional restrictions on withdrawing funds from the student's non-
Federal college savings account, that is their purview.
    Changes: None.
    Comment: One commenter noted that the Department had proposed that 
the college savings accounts be held for the GEAR UP students in trust 
pending their graduation from high school and enrollment ``in a college 
or university,'' and asked what we mean by a ``college or university.'' 
The commenter asked whether the phrase is limited to accredited 
institutions, and whether technical schools such as culinary 
institutes, automotive schools, or cosmetology schools would qualify.
    Discussion: By ``college or university,'' the Department means an 
institution of higher education that participates in the Title IV 
Student Financial Assistance programs and is described in section 102 
of the HEA. This interpretation is necessary because GEAR UP funds may 
only be used for college savings accounts as a supplement to financial 
assistance that GEAR UP grantees are already provided as scholarships 
and student financial assistance under section 404E of the HEA. Section 
404E provides that to receive this assistance students must be enrolled 
in such an institution of higher education.
    Changes: We have added language to paragraph (d) in Section I of 
Priority 2 to clarify that GEAR UP funds deposited into the college 
savings account and used for the costs associated with postsecondary 
education must be used for costs associated with enrollment at an 
institution of higher education, as the term is defined in section 102 
of the HEA.

Data Collection and Evaluation

    Comment: A commenter agreed with the Department's proposal to avoid 
collecting Social Security Numbers (SSNs) and taxpayer identification 
numbers (TINs). The commenter noted that many schools are not allowed 
to collect or disclose such personally identifiable information about 
their students, and yet many institutions, including 529 plans, require 
all account holders to provide this information. The commenter also 
identified locations that it stated were able to implement college 
savings accounts without SSNs or TINs. Finally, because of what the 
commenter viewed as ``Know Your Customer'' provisions of the Patriot 
Act and Bank Secrecy Act, the commenter urged the Department, perhaps 
together with other entities or experts in this area, to advise on the 
propriety of opening accounts without SSNs and TINs.
    Discussion: The Department encourages grantees to avoid collecting 
SSNs or TINs when it is feasible to do so. For example, we note that 
some financial institutions may accommodate the use of unique 
identifiers for students in lieu of SSNs or TINs. However, we 
acknowledge that some financial institutions may require personally 
identifiable information for the purposes of managing accounts. The 
Department does not prohibit grantees from collecting this information 
in the event that doing so is necessary in a given State. We expect to 
provide technical assistance to grantees on this topic, including any 
implications that collecting this personal identifiable information may 
have under Federal privacy laws.
    Changes: None.
    Comment: One commenter urged the Department to design, write code, 
and implement common account monitoring standards across the full 
demonstration project since, according to the commenter, without such a 
comprehensive design plan, there is a substantial risk of substantial 
data failure on savings patterns and performance. We read the comment 
to be concerned, in part, with the quality of data that grantees would 
need to provide for the project evaluation.
    Discussion: While those preparing the Department's evaluation of 
this demonstration project will review comments on the account 
monitoring standards, the specific data items and data collection 
structure to be used in the Department's evaluation were not part of 
the notice of proposed priorities and are not subject to public 
comment.
    Changes: None.
    Comment: A number of commenters recommended approaches for the 
design of the Department's evaluation of this demonstration project. 
Among other things, commenters recommended that the evaluation collect 
and analyze differences in GEAR UP services across schools, family 
financial stability data and the different types of financial 
counseling provided by grantees and their relationship to impacts. The 
commenters also recommended that the evaluation use statistical 
techniques to account for school-level clustering of students in the 
analysis.

[[Page 5049]]

    Discussion: While those preparing the Department's evaluation of 
this demonstration project will review comments on the research design, 
the specific data items and statistical analyses to be used in the 
Department's evaluation were not part of the notice of proposed 
priorities and are not subject to public comment.
    We note, however, that the Department intends that the evaluation 
will address, to the extent possible, the ways in which both regular 
and demonstration GEAR UP services are implemented across schools. We 
also intend to collect some information about income and assets through 
parent surveys conducted in spring 2014 and 2016. However, we do not 
believe that we can adequately address family financial stability and 
how that might relate to the timing and levels of contributions to 
savings accounts without more frequent and longer surveys that would be 
burdensome to parents and costly for the evaluation to implement. 
Finally, the Department plans for the evaluation to appropriately 
adjust for clustering of students within schools in performing the 
statistical analysis of impacts.
    Changes: None.

Grantee Attendance at Project Meetings

    Comment: None.
    Discussion: Paragraph (h) in Section I of Proposed Priority 2 
required the grantee's project director to attend one particular 
meeting held by the Department. We have revised this paragraph to 
provide more details and require attendance at multiple Department 
meetings, likely held in conjunction with the annual meetings of the 
National Council for Community and Education Partnerships (NCCEP), 
where technical assistance will be provided. We made these changes to 
ensure that we provide sufficient technical assistance to grantees and 
to allow grantees to be better prepared to attend these meetings.
    Changes: Paragraph (h) in Section I of Priority 2 has been revised 
to state that project directors, site coordinators, and other 
appropriate project staff are required to participate in meetings of 
GEAR UP grantees that the Department will convene to provide 
professional development and technical assistance to grantees 
participating in the demonstration project.
    Final Priorities: The Assistant Secretary for Postsecondary 
Education establishes these priorities to determine the effectiveness 
of implementing college savings accounts and providing financial 
counseling in conjunction with other GEAR UP activities as part of an 
overall college access and success strategy.
    Priority 1: Funding Eligibility.
    To meet this priority, an applicant must--
    (a) Have received a new GEAR UP State grant in FY 2011 or FY 2012 
that supports activities in at least six high schools, each of which 
must serve a cohort of at least 30 GEAR UP participants who will be in 
ninth grade during the 2013-2014 academic year (for recipients of FY 
2011 grants) or 2014-2015 academic year (for recipients of FY 2012 
grants);
    For the purposes of this priority, ``high school'' means a school 
that serves students in grades 9-12.
    (b) Use the cohort approach (see Section 404B(d)(1) of the Higher 
Education Act (HEA)) to select participating GEAR UP students; and
    (c) Identify in its application the names, locations, and National 
Center for Education Statistics (NCES) identification numbers of the 
GEAR UP high schools expected to participate in the demonstration and 
the number of GEAR UP participants expected to be in ninth grade during 
the 2013-2014 or 2014-2015 academic year at each GEAR UP school 
identified. (NCES school identification numbers can be found at: http://nces.ed.gov/ccd/schoolsearch/).
    Priority 2: College Savings Accounts and Financial Counseling.
    To meet this priority, an applicant must submit in its application 
a comprehensive plan for providing (1) students in half of the GEAR UP 
high schools identified by the applicant with safe and affordable 
deposit accounts at federally insured banks, credit unions, or other 
institutions that offer safe and affordable financial services 
consistent with provisions of this Priority, and (2) financial 
incentives to encourage saving and related financial counseling to 
students and parents.
    An applicant also must agree in its application to participate in 
an evaluation of this college savings account demonstration project 
that will examine the effect of college savings accounts and counseling 
on student and family behaviors and attitudes associated with college 
enrollment, as described in the Research Evaluation section of this 
priority. The Department's Institute of Education Sciences (IES) in 
partnership with the Office of Postsecondary Education (OPE) will 
oversee the evaluation, which will be conducted by an IES evaluation 
contractor.

I. College Savings Accounts and Financial Counseling

    The applicant must describe in its application its plan for 
implementing college savings accounts and financial counseling, 
including how, preferably at the time of application but no later in 
time than to have all savings accounts operational before the start of 
the cohort's ninth grade in the 2013-2014 or 2014-2015 school years, it 
will--
    (a) Student Savings Accounts.
    (1) In partnership with a financial institution, provide students 
with an account that allows saving in an interest-bearing, federally 
insured deposit account, U.S. Government Treasury securities, or a 
fully guaranteed savings option within a 529 college savings plan. 
Accounts may also present students and families with investment options 
that present risks in exchange for the potential for larger returns but 
that are in no way guaranteed.
    (2) Ensure that Federal funds are maintained in a single 
``notional'' account that is in fact separate from any non-Federal 
funds, tracks the amount of Federal GEAR UP seed and matching funds and 
accrued interest earned by each student, permits each student to see 
both the Federal funds and associated interest earned as well as any 
non-Federal funds in a single account statement, and is invested only 
in federally insured vehicles or U.S. Treasury securities;
    (3) Ensure that the non-Federal investments are in U.S. Government 
Treasury securities or a low- or no-fee age-based fund unless the 
parents or student chooses otherwise;
    (4) Open savings accounts for students in automatic or nearly 
automatic fashion and describe how the savings account enrollment 
approach entails or approximates an automatic enrollment framework. 
Automatic enrollment means parents and students are not required to opt 
into the account, but may opt out of it. If parents and students take 
no action, the account is opened. Action is required to decline 
participation.

    Note: Applicants are also encouraged to propose automatic 
savings options, such as automatic payroll deductions by parents of 
participating students.

    (5) Ensure that individual deposits could be made easily and at no 
cost by the student, the student's parents, or others on the student's 
behalf; that deposits would be able to be made online, including on 
mobile devices, in person at convenient locations, or by mail; and that 
account information

[[Page 5050]]

would be viewable online, including on mobile devices; and
    (6) Ensure that funds are held in the name of the account trustee 
described in paragraph (k) of part I of this priority with the 
participating students named as beneficiaries.
    (b) Federal Seed and Matching. Provide for Federal seed and 
matching of Federal funds in student savings accounts for students in 
participating treatment high schools as follows:
    (1) Within two weeks of the beginning of students' ninth grade 
school year in the fall of 2013 or the fall of 2014, seed each 
student's account with $200 in Federal GEAR UP funding.
    (2) Each month, for every contribution up to $25 beyond the initial 
seed amount that the student or family deposits into the student's 
account, deposit an additional equal size contribution up to $25 of 
Federal GEAR UP funding into the account, for a maximum of $300 in 
Federal matching funds each year for a maximum of four years.
    (3) Notwithstanding the monthly cap on contributions referenced in 
paragraph two above, once per quarter during each calendar year during 
the project period, on a date approved by the Department, offer 
students and parents a two-week catch-up period if the student has not 
earned the maximum monthly match for that year and encourage students 
and families to make contributions at least sufficient to earn up to 
the maximum Federal match.
    (4) Ensure that if, at the end of each calendar year, the student 
has not exhausted the Federal match, any unearned matching funds would 
no longer be available to that student or to the applicant and would be 
returned to the Department.
    (c) Non-Federal Seed and Matching. Not provide additional seed or 
matching funding from GEAR UP or non-GEAR UP resources to participating 
students beyond the funds described in (b), or solicit or raise money 
from non-Federal sources as additional contributions to the student's 
non-Federal college savings account.
    (d) Withdrawal and Transfer of Federal Funds. Provide for the 
withdrawal and transfer of Federal GEAR UP funds as follows:
    (1) The applicant must ensure that withdrawals of Federal GEAR UP 
funds are made only upon approval of the savings account trustee and 
are only made from the account to eligible students, or to an 
institution of higher education, as the term is defined in section 102 
of the HEA, on behalf of a student upon that student's enrollment in an 
HEA Title IV-eligible institution of higher education, as the term is 
defined in section 102 of the HEA, for the purposes of paying for 
tuition, fees, course materials, living expenses, and other covered 
educational expenses as defined in the HEA, and other costs related to 
postsecondary education that the account trustee, based on instructions 
from the grantee, determines to be appropriate.
    (2) An account trustee may not withdraw Federal GEAR UP funds for 
non-qualified purposes and may not transfer them to other individuals. 
If this rule is broken, the Department may require the applicant to 
terminate its relationship with the trustee and select a different 
entity to serve as savings account trustee. The initial trustee may be 
subject to penalties for misuse of Federal funds.
    (e) Withdrawal and Transfer of Non-Federal Funds. Establish rules 
for the withdrawal and transfer of non-Federal funds, which must 
include a requirement that any withdrawal or transfer of non-Federal 
funds must be overseen by the account trustee. A withdrawal of non-
Federal funds from the savings account for non-qualified purposes will 
result in a removal of Federal matching funds that have been 
contributed on behalf of the student if the amount of non-Federal funds 
remaining in the account after the non-qualified withdrawal is less 
than the total amount of Federal matching funds contributed (not 
including the $200 Federal seed).
    For example, if student and parent contributions total $140, 
Federal GEAR UP matches total $120, and the student withdraws $50 in 
non-Federal funds for non-qualified purposes, then $30 in Federal GEAR 
UP matching funds earned up until that point would be removed from the 
account because the amount of non-Federal funds remaining in the 
account after the non-qualified withdrawal--$90--is $30 less than the 
amount of Federal matching funds contributed. The Federal matching 
funds could be earned back in catch-up periods during that same year. 
The $200 seed money provided with Federal GEAR UP funds will not be 
removed from the account.
    (f) Student Eligibility. Establish student eligibility to receive 
Federal GEAR UP funds as a seed and match for GEAR UP student savings 
accounts as follows:
    (1) Students must be enrolled in the ninth grade in one of the 
randomly selected treatment high schools (as described in the Research 
Evaluation section of this priority) in the fall of 2013 or the fall of 
2014.
    (2) If a student does not use funds in the student's account within 
six years of his or her scheduled completion of secondary school, the 
undisbursed Federal GEAR UP funds must be returned to the Department.
    (3) Students who transfer from a GEAR UP high school to a non-GEAR 
UP high school during the project period will continue to remain 
eligible for the matching funds from the grantee.
    (4) At the discretion of the grantee, students who during the 
project period become members of the GEAR UP cohort by transferring 
from a non-treatment high school into a treatment GEAR UP high school 
after ninth grade may have an account with the $200 seed money and 
availability of matching funds, provided that the grantee has 
sufficient funds to first make the matches it is required to make for 
students in the treatment high schools.
    (g) Financial Counseling. Provide general and targeted (that is, 
specific to each individual's account and financial circumstances) 
savings account and financial counseling to all students in the 
treatment group and to their parents. Counseling should encourage 
regular saving and prepare students and their families to make informed 
financial decisions about college and other matters. Counseling must 
include at least 12 hours per year of counseling for students and at 
least biannual counseling meetings for parents, which must include a 
review of the contributions to the account and any interest accrued. 
The counseling must be in addition to, and may not serve as, the 
financial aid, financial literacy, or college savings counseling 
already provided as part of regular GEAR UP services.
    (h) Staff Professional Development and Coordination with the 
Department.
    (1) Agree to participate in Department-provided professional 
development for the GEAR UP or school staff who will deliver the 
financial planning and counseling described in paragraph (g) of part I 
of this priority.
    (2) Ensure that the project director, site coordinators, and 
appropriate project staff participate in meetings of GEAR UP grantees 
that the Department will convene to provide professional development 
and technical assistance to GEAR UP grantees participating in the 
demonstration.

    Note: The meetings are likely to be held in conjunction with the 
annual meetings of the National Council for Community and Education 
Partnerships (NCCEP), the association of GEAR UP grantees. The 
February 2013 meeting, held in conjunction with the GEAR UP 
Capacity-Building Workshop, will likely cover technical

[[Page 5051]]

assistance to the State administrators of the college savings plans, 
and the logistical and administrative issues in setting up the 
college savings accounts. The remainder of the meetings during the 
project period will likely focus on professional development for 
GEAR UP staff providing the counseling to families.

    (i) Site Coordination. Designate a site coordinator for each GEAR 
UP high school that participates in the demonstration and describe the 
role of the coordinator and to whom he or she will be accountable. The 
site coordinators in schools that are randomly selected to provide 
college savings accounts and financial counseling (treatment schools) 
have responsibility, exercised consistent with the State's plan and 
approved project application, for ensuring that their schools meet all 
requirements for participating in the college savings demonstration 
project. Coordinators must, for example, ensure that college savings 
accounts are opened and seeded within two weeks of the start of ninth 
grade; that related financial counseling and coaching are provided to 
participating students and parents; and that schools cooperate with 
data collection for the evaluation. (See the Research Evaluation 
section of this priority for further information on selection of the 
treatment schools). Site coordinators in schools that are not 
participating in the college savings account and counseling components 
(control schools) must ensure that their schools cooperate with the 
data collection for the evaluation.
    (j) Savings Account Administrator. Select a savings account 
administrator to hold the account funds, accept deposits, and issue 
qualified withdrawals. The applicant must identify the account 
administrator in the application or describe the process by which the 
account administrator will be selected.
    The account administrator must be able to fulfill its role until 
all Federal funds have been disbursed or returned to the Department. 
During the grant project period, modest administrative fees, not to 
exceed one percent of account balances, could be paid to the savings 
account administrator with Federal GEAR UP funds to cover expenses 
related to the GEAR UP College Savings Account Demonstration Project.
    (k) Savings Account Trustee. Select a savings account trustee to 
manage the account funds and approve withdrawals and other account 
activities. The account trustee must have demonstrated experience in 
successfully managing financial services. The applicant must identify 
the account trustee in the application or describe the process by which 
the account trustee will be selected.
    The account trustee must be able to fulfill its role until all 
Federal funds have been disbursed or returned to the Department. The 
account trustee may not be a student's parent or guardian, and must be 
separate and distinct from the account administrator. The trustee must 
be a State agency, such as a State Department of Treasury, Office of 
the Governor, Lieutenant Governor, or Comptroller, a tax-exempt non-
profit organization or foundation, or for-profit organization or 
business with demonstrated expertise and experience in successfully 
managing financial services. During the grant project period, modest 
administrative fees, not to exceed one percent of account balances, 
could be paid to the savings account trustee with Federal GEAR UP funds 
to cover expenses related to the GEAR UP College Savings Account 
Demonstration Project.
    (l) Grantee Coordinator. Specify a person or persons at the State 
and local educational agency (LEA) level who will administer and 
coordinate all components of the demonstration, including provision of 
services provided by the GEAR UP high schools, monitoring the rules 
established for and activities carried out by the savings account 
administrators and trustees including distribution of letters, 
notifying parents or guardians about the administration of the student 
survey by the evaluator and about the release of designated ``directory 
information'' from the education records of the student to the savings 
account administrator, the savings account trustee, or both, as needed 
to assist with establishing and managing the college savings accounts, 
and distributing forms enabling parents or guardians to opt out of 
participation in the college savings demonstration project. (The 
Department will provide a sample parent/guardian letter and opt out 
form.) The grantee coordinator must also include aggregate information 
about the college savings account demonstration project in the 
grantee's annual performance report to the Department, including the 
number of accounts opened and the total amount of Federal GEAR UP 
matching funds deposited on behalf of students. The grantee coordinator 
must also respond to the evaluators' annual request for information on 
individual student accounts, including the timing and amounts of 
disbursements of seed and matching funds, and the student's name, 
address, and date of birth.
    (m) Directory Information Policies. Include only districts or 
schools that will have directory information policies in place prior to 
July 1, 2013, or July 1, 2014, that allow for student information to be 
shared in compliance with Federal law with the savings account 
administrator, the savings account trustee, or both, as needed to 
establish and manage the college savings accounts. Under the provisions 
of the Family Educational Rights and Privacy Act (FERPA) and its 
implementing regulations (20 U.S.C. 1232g and 34 CFR Part 99), each of 
the LEAs or schools in the application must have provided public notice 
that the district or schools have designated as ``directory 
information'' under FERPA the student's name, address, grade level, and 
date of birth. In addition, in accordance with FERPA, if any parent or 
guardian of a student has opted out of the disclosure of this 
``directory information,'' the school or LEA will not provide the 
``directory information'' for that student to the savings account 
administrator, the savings account trustee, or both, as needed to 
assist with establishing the college savings accounts, and savings 
accounts with GEAR UP seed money will not be opened in his or her name, 
unless the parent or guardian of that student provides consent under 34 
CFR 99.30.
    (n) Grantee Non-Federal Match Requirement. Meet the statutory non-
Federal match requirement (see Section 404C(b) of the HEA and 34 CFR 
694.7.)

    Note: A State grantee would meet the statutory match requirement 
tied to these additional research demonstration project funds 
through any ``over-matched'' non-Federal funds it already is 
committed to providing under its regular GEAR UP application. A 
State that would need to provide other non-Federal funds in order to 
meet the statutory match requirement tied to GEAR UP funds provided 
for the research demonstration project would need to include with 
its application a budget of how it proposed to do so. Contributions 
of students, families, parents' employers, community-based 
organizations, religious organizations, and others to student 
savings account could be treated as a matching contribution, but, if 
during any project year these private contributions to savings 
account were less than anticipated, a State would have to ensure by 
the end of each project year that it had met the annual matching 
requirement through other non-Federal contributions to this project 
or the regular GEAR UP activities.

    (o) Budget. Provide a budget and budget narrative with projected 
charges of Federal GEAR UP funds and any non-Federal matching 
contributions, that describes the expected costs of implementing the 
proposed project, including provision of payment to the account 
administrator, the account

[[Page 5052]]

trustee, or both of reasonable costs for managing the savings accounts 
according to requirements of this section.
    (p) Over-matching. A family that over-matches the Federal account 
in any month may not receive credit for the amount of over-match in any 
future month, including a catch-up period, for purposes of meeting that 
month's GEAR UP program matching contribution.

II. Research Evaluation

    The applicant must describe in its application its agreement to the 
following:
    (a) Random Assignment of Schools. An applicant must--
    (1) Agree to a random assignment by the evaluation contractor of 
one-half of the GEAR UP high schools identified in its application for 
their students to receive demonstration services (treatment schools). 
In addition to the regular GEAR UP services offered at these treatment 
schools, GEAR UP projects must also offer the college savings account 
and financial counseling intervention in accordance with Priority 1 
(Funding Eligibility). The students in the remainder of the high 
schools (control schools) will not receive the college savings account 
and financial counseling components but will continue to receive 
regular GEAR UP services.
    (2) Agree not to offer a program that provides seed or matching 
funds for college savings accounts in the control schools for the 
duration of the GEAR UP grant.
    (b) Data Collection. The applicant and the LEA(s) and GEAR UP high 
schools that would like to implement college savings accounts (some of 
which will become control schools) must agree to participate and 
cooperate in the data collection conducted by the Department's 
evaluator, which will include the following:
    (1) Two surveys of GEAR UP project directors at the State education 
agency (SEA) or LEA level and site coordinators for each school about 
the implementation of the college savings account and counseling 
components, including the extent to which the college savings account 
counseling was provided in the treatment schools and counseling and 
other services were provided under the GEAR UP grant in both treatment 
and control schools;
    (2) Two surveys of GEAR UP students about their participation in 
GEAR UP program activities and other college access programs; their 
expectations about college enrollment and costs; their knowledge about 
college savings and financial aid; their financial literacy; their 
plans for enrollment in college-preparatory courses; and their 
financial behaviors, including the extent to which they are saving for 
college;
    (3) Two surveys of parents of students participating in the GEAR UP 
program, in a form that will be comprehensible to parents of English 
language learners, about their participation in GEAR UP program 
activities and other college access programs; their expectations about 
their child's college enrollment and costs; their knowledge about 
college savings and financial aid; their financial literacy; and their 
financial decisions, including the extent to which they are saving for 
college;
    (4) For treatment schools, data on the extent to which their staff 
attend the required professional development;
    (5) For both treatment and control schools, rosters of all GEAR UP 
participants who are in the ninth grade in fall 2013 or fall 2014, 
including the names of the students, and other identifying information 
(such as their dates of birth, zip codes, parent contact information, 
or district or school identification numbers) that will enable the 
Department's evaluator to request school administrative records from 
the State or LEA for the appropriate students;
    (6) Access to the appropriate State or LEA school administrative 
records, which will be used to measure student characteristics and 
achievement prior to the ninth grade, student attendance, course taking 
patterns, and credits in grades 9-12 for students in the treatment and 
control schools;
    (7) From the grantee, annual information on the accounts of 
individual students, including the timing and amounts of disbursements 
of seed and matching funds, and the student's name, address, and date 
of birth.
    (c) Letters of Support. Each applicant must include in its 
application the following:
    (1) Letters of support from the relevant LEAs. Unless the SEA 
agrees in the application to provide this same data on its own, these 
letters of support also must contain the LEA's agreement to provide the 
relevant school records data to the evaluation contractor, including 
the following school records data for GEAR UP participants who are 
enrolled in the ninth grade in the treatment schools and control 
schools in the fall 2013 or fall 2014, regardless of whether the 
student has continued to be enrolled in his or her original high 
school:
    (i) Scores on State or district-administrated assessments of 
reading and math for the seventh and eighth grades and high school 
years;
    (ii) High school attendance;
    (iii) High school courses in which the student was enrolled and 
grades and credits received for those courses;
    (iv) Demographic information such as gender, race/ethnicity, 
parents' educational attainment, English proficiency, and the extent to 
which a language other than English is spoken at home;
    (v) Whether the student is certified as eligible for free or 
reduced price lunch through the National School Lunch Program; and
    (vi) Whether the student has an individualized education program.
    (2) A letter from the principal of each high school identified in 
the application agreeing to participate in all aspects of the 
evaluation and grant, including:
    (i) Random assignment of the high school;
    (ii) If randomly selected to implement the demonstration services, 
allowing the GEAR UP program to offer the college savings account and 
counseling components to eligible GEAR UP participants at the 
principal's high school; and
    (iii) Regardless of whether a school is in the treatment or control 
group, provision to the evaluation contractor of rosters of GEAR UP 
participants who are in the ninth grade in fall 2013 or fall 2014, 
including identifying information (such as student names, dates of 
birth, zip codes, parent contact information, or district or school 
identification numbers) that will enable the contractor to request the 
administrative records from the State or LEA about the appropriate 
students.
    (3) Letter from the superintendent of each LEA overseeing the 
schools in the evaluation, agreeing to all aspects of the evaluation 
and grant, including--
    (i) Random assignment of their GEAR UP high schools listed in the 
application;
    (ii) If randomly selected to implement the demonstration services, 
an agreement allowing the State GEAR UP program to offer the college 
savings account and financial counseling to eligible GEAR UP 
participants consistent with the priorities and requirements in this 
notice of final priorities; and
    (iii) Regardless of whether the schools are in the treatment or 
control group, an agreement to provide to the evaluation contractor 
rosters of GEAR UP participants who are in the ninth grade in fall 2013 
or fall 2014, including identifying information (such as student names, 
dates of birth, zip codes, parent contact information, or district or 
school

[[Page 5053]]

identification numbers) that will enable the contractor to request the 
administrative records from the State or LEA about the appropriate 
students.
    (iv) An agreement to have district or school directory information 
policies in place prior to July 1, 2013, or July 1, 2014, that allow 
for student information to be shared in compliance with Federal law 
with the savings account administrator, the savings account trustee, or 
both, as needed to establish and manage the college savings accounts. 
Under the provisions of the FERPA and its implementing regulations, 
each of the LEAs in the application or schools therein must have 
provided public notice that the district or school has designated as 
``directory information'' under FERPA the student's name, grade level, 
address, and date of birth. In addition, in accordance with FERPA, if 
any parents or guardians of a student has opted out of the disclosure 
of this student directory information, the school or LEA will not 
provide ``directory information'' on that student to the savings 
account administrator or the savings account trustee, and savings 
accounts with GEAR UP seed money will not be opened in his or her name, 
unless the parent or guardian of that student provides consent under 34 
CFR 99.30.
    Types of Priorities: When inviting applications for a competition 
using one or more priorities, we designate the type of each priority as 
absolute, competitive preference, or invitational through a notice in 
the Federal Register. The effect of each type of priority follows:
    Absolute priority: Under an absolute priority, we consider only 
applications that meet the priority (34 CFR 75.105(c)(3)).
    Competitive preference priority: Under a competitive preference 
priority, we give competitive preference to an application by (1) 
awarding additional points, depending on the extent to which the 
application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) 
selecting an application that meets the priority over an application of 
comparable merit that does not meet the priority (34 CFR 
75.105(c)(2)(ii)).
    Invitational priority: Under an invitational priority, we are 
particularly interested in applications that meet the priority. 
However, we do not give an application that meets the priority a 
preference over other applications (34 CFR 75.105(c)(1)).
    This notice of final priorities does not preclude us from proposing 
additional priorities, requirements, definitions, or selection 
criteria, subject to meeting applicable rulemaking requirements.

    Note:  This notice of final priorities does not solicit 
applications. In any year in which we choose to implement this 
priority, we invite applications through a notice in the Federal 
Register.

Executive Orders 12866 and 13563

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and, therefore, subject to 
the requirements of the Executive order and subject to review by the 
Office of Management and Budget (OMB). Section 3(f) of Executive Order 
12866 defines a ``significant regulatory action'' as an action likely 
to result in a rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local or 
tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    This final regulatory action is not a significant regulatory action 
subject to review by OMB under section 3(f) of Executive Order 12866.
    We have also reviewed this final regulatory action under Executive 
Order 13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only upon a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing these final priorities only on a reasoned 
determination that their benefits justify their costs. In choosing 
among alternative regulatory approaches, we selected those approaches 
that maximize net benefits. Based on the analysis that follows, the 
Department believes that this regulatory action is consistent with the 
principles in Executive Order 13563.
    We also have determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.
    In accordance with both Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. The potential costs are those 
resulting from statutory requirements and those we have determined as 
necessary for administering the Department's programs and activities.
    Intergovernmental Review: This program is subject to Executive 
Order 12372 and the regulations in 34 CFR part 79. One of the 
objectives of the Executive order is to foster an intergovernmental 
partnership and a strengthened federalism. The Executive order relies 
on processes developed by State and local governments for coordination 
and review of proposed Federal financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the program contact person 
listed under FOR FURTHER INFORMATION CONTACT.

[[Page 5054]]

    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. Free 
Internet access to the official edition of the Federal Register and the 
Code of Federal Regulations is available via the Federal Digital System 
at: www.gpo.gov/fdsys. At this site you can view this document, as well 
as all other documents of this Department published in the Federal 
Register, in text or Adobe Portable Document Format (PDF). To use PDF 
you must have Adobe Acrobat Reader, which is available free at the 
site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

    Dated: January 16, 2013.
David A. Bergeron,
Acting Assistant Secretary for Postsecondary Education.
[FR Doc. 2013-01125 Filed 1-22-13; 8:45 am]
BILLING CODE 4000-01-P
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