[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)]
[Rules and Regulations]
[Pages 54292-54298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26070]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Parts 272 and 273
[Amendment No. 374]
RIN 0584-AB93
Food Stamp Program: Treatment of Educational and Training
Assistance
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: On November 1, 1993, the Department published a proposed rule
regarding the eligibility of students for the Food Stamp Program and
the treatment of educational and training assistance for food stamp
purposes. Public comments were solicited and considered. This rule
finalizes the provisions regarding educational and training assistance.
The provisions regarding student eligibility were published final in a
separate rule.
EFFECTIVE DATE: This rule is effective December 16, 1996.
FOR FURTHER INFORMATION CONTACT: Certification Policy Branch, Program
Development Division, Food Stamp Program, Food and Consumer Service,
USDA, 3101 Park Center Drive, Alexandria, Virginia 22302; telephone:
(703) 305-2520.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be significant and was
reviewed by the Office of Management and Budget under Executive Order
12866.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule in 7 CFR Part 3015, Subpart V and related Notice (48 FR 29115,
June 24, 1983), this Program is excluded from the scope of Executive
Order 12372 which requires intergovernmental consultation with State
and local officials.
Regulatory Flexibility Act
This action has been reviewed with regard to the requirements of
the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). The Under
Secretary for Food, Nutrition, and Consumer Services has certified that
this action does not have a significant economic impact on a
substantial number of small entities. State welfare agencies are
affected to the extent that they must implement the provisions
described in this action. Potentially eligible and currently
participating households are affected to the extent that they contain
members who are eligible students and who receive assistance excluded
from income and resources under this action. Some currently
participating student households could realize an increase in benefits
as a result of this action.
Executive Order 12778
This proposed rulemaking has been reviewed under Executive Order
12778, Civil Justice Reform. This rule is intended to have preemptive
effect with respect to any State or local laws, regulations or policies
which conflict with its provisions or which would otherwise impede its
full implementation. This rule is not intended to have retroactive
effective dates unless so specified in the ``Dates'' section of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions all applicable administrative
procedures must be exhausted. In the Food Stamp Program the
administrative procedures are as follows: (1) for program benefit
recipients--state administrative procedures issued pursuant to 7 U.S.C.
2020(e)(1)) and 7 CFR 273.15; (2) for State agencies--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for
rules related to non-quality control (QC) liabilities) or Part 283 (for
rules related to QC liabilities); (3) for program retailers and
wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023
set out at 7 CFR 278.8.
The Department received one comment concerning Executive Order
12778. One commenter said that administrative procedures do not have to
be exhausted before judicial challenge and that the Department should
correct this misstatement and avoid making such statements in future
rulemakings. While we believe that it would have been fully within the
Secretary's discretionary authority, as granted in section 4(c) of the
Food Stamp Act (7 U.S.C. Sec. 2013(c)), to establish an exhaustion
requirement, this matter has now been specifically addressed by
statute. Section 212(e) of the Federal Crop Insurance Reform and
Department of Agriculture Reorganization Act of 1994, P. L. 103-354,
requires persons to exhaust all administrative appeal procedures
established by the Secretary or required by law before the person may
bring an action in a court of competent jurisdiction against the
Secretary, the Department or an agency, office, officer, or employee of
the Department.
Paperwork Reduction Act
This rule does not contain reporting or recordkeeping requirements
subject
[[Page 54293]]
to review by the Office of Management and Budget under the Paperwork
Reduction Act of 1995 (P.L. 104-13).
This rule removes 7 CFR 273.9(c)(10)(xi) which contains
verification requirements for educational assistance, and instructs
State agencies to follow the verification requirements already outlined
in 273.2(f).
This rule refers to but does not affect the current information
collection requirements for 7 CFR 273.2(f). State welfare agencies must
verify certain information which affects household eligibility and
benefits. Applicant households are required to provide the necessary
information to the State agency. The reporting and recordkeeping burden
associated with the application, certification, and continued
eligibility of food stamp applicants has been approved by the Office of
Management and Budget (OMB) under OMB No. 0584-0064. OMB approval
includes the burden associated with verification of information
provided on the food stamp application.
Background
On November 1, 1993, the Department proposed procedures to
implement amendments to the Food Stamp Act of 1977, as amended, (7
U.S.C. 2011 et seq.) (Food Stamp Act), as set forth in Sections 1715
and 1727 of Pub. L. 101-624, the Mickey Leland Memorial Domestic Hunger
Relief Act of 1990 (Mickey Leland Act), enacted November 28, 1990, and
Section 903 of Title IX of the Food, Agriculture, Conservation, and
Trade Act Amendments of 1991 (1991 Technical Amendments), enacted
December 13, 1991. Section 1715 of the Mickey Leland Act, as amended by
Section 903 of the 1991 Technical Amendments, establishes procedures
for determining an income exclusion for certain educational assistance
received by eligible student households. Section 1727 of the Mickey
Leland Act amended the Food Stamp Act to grant eligibility for
participation in the Food Stamp Program (Program) to certain college
students currently considered ineligible to participate.
Procedures were also proposed for implementing amendments to the
Higher Education Act of 1965 as set forth in Sections 471 and 1345 of
Pub. L. 102-325, the Higher Education Amendments of 1992, enacted July
23, 1992. Those sections prohibit certain Federal educational
assistance from being considered as income and resources for food stamp
purposes.
Lastly, procedures were proposed for implementing a provision of
Pub. L. 101-392, the Carl D. Perkins Vocational and Applied Technology
Education Act Amendments of 1990 (Perkins Act), enacted September 25,
1990, which prohibits counting certain educational assistance received
by students from a program funded by the Perkins Act as income or
resources when determining the eligibility and benefits of student
households.
The Department accepted comments on this rulemaking through January
2, 1994. Comments were received from eight State agencies, one public
interest group, and one advocate. The comments concerning educational
income are discussed below. Comments not related to the proposed
changes are not addressed.
The proposed rule contained provisions on student eligibility and
the treatment of educational and training assistance. This rule
finalizes only the provisions concerning educational and training
assistance. The provisions regarding student eligibility have been
finalized in a separate rule.
A full explanation of the provisions in this final rule was
contained in the preamble of the proposed rule (58 FR 58463). The
reader should refer to the preamble of that rule for a full
understanding of the provisions of this final rule.
Since the proposed rule was published, the Department has
undertaken a complete review of all the Food Stamp regulations in
response to the President's Regulatory Reform Initiative. The
Department has considered ways to reform the Program regulations in
order to remove overly prescriptive provisions, eliminate outdated and
redundant regulatory requirements and increase State flexibility.
Several of the decisions the Department has made on this final rule
have been made with the Regulatory Reform Initiative in mind and are
noted as such in the preamble.
Resources
Resource Exclusions
The November 1, 1993, regulation proposed to revise 7 CFR
273.8(e)(11)(xi) to conform to provisions in the Higher Education Act
and the Perkins Act. In the interim, 7 CFR 273.8(e)(11)(xi) has been
redesignated as 273.8(e)(11)(x). These two laws exclude resources for
student assistance funded in whole or in part under Title IV and Part E
of Title XIII of the Higher Education Act and the Perkins Act.
The Department received three comments concerning this provision.
Two supported it. One suggested that a definition of Part E of Title
XIII of the Higher Education Act be included in the preamble. Part E of
Title XIII of the Higher Education Act refers to the Tribal Development
Student Assistance Revolving Loan Program.
During the Regulatory Reform Initiative, the Department concluded
that it is not necessary to list all Federal statutes that exclude
resources as the list is constantly changing and is quickly outdated.
The Department routinely sends out policy memos updating the list of
Federal statutes which provide for such exclusions. The Department
believes that the regulations at 7 CFR 273.8(e)(11), which exclude
resources that are excluded for food stamp purposes by express
provision of Federal statute, provide adequate guidance. Therefore, the
Department is not adopting the proposed revisions. Instead, the
Department is removing 7 CFR 273.8(e)(11)(x), since it is obsolete, and
is instructing State agencies to abide by 7 CFR 273.8(e)(11) and policy
memos listing the Federal statutes which exclude resources for food
stamp purposes.
Earned Income
Work Study and Fellowships as Earned Income
The November 1, 1993, regulation proposed to add a new paragraph, 7
CFR 273.9(b)(1)(vi) and to make a conforming amendment to 7 CFR
273.9(b)(2)(iv) which would define income from work study or a
fellowship with a work requirement as earned income. As such, it would
be subject to the provisions of 7 CFR 273.9(d)(2), which provide for a
20 percent earned income deduction. The Department received three
comments, all in support of the provision.
It has come to the Department's attention that there are also
assistantships which have a work requirement, such as working as a lab
assistant or teacher's aide. To be consistent with the treatment of
income from work study and fellowships with a work requirement, the
Department is adopting the proposed change at 7 CFR 273.9(b)(1)(vi)
with a modification. It will now state that earned income includes
educational assistance which has a work requirement (such as work
study, an assistantship or fellowship with a work requirement) in
excess of the amount excluded under 7 CFR 273.9(c)(3). The Department
is making a conforming amendment at 7 CFR 273.9(b)(2)(iv), the
definition of unearned income, adding a more general phrase, ``other
than educational assistance with a work requirement,'' in order to
capture work study, fellowships
[[Page 54294]]
and assistantships with a work requirement.
The November 1, 1993, rule proposed to include at 7 CFR 273.9(c)(3)
a provision that the 20 percent earned income deduction required by
paragraph (d)(2) of this section shall be applied to income from work
study and income from a fellowship with a work requirement after
allowable exclusions are made pursuant to paragraph (c)(3) of this
section. This is already covered by 7 CFR 273.9(b)(1)(vi), as amended
by this rule, and 7 CFR 273.9(d)(2). To include a similar provision at
7 CFR 273.9(c)(3) would be redundant. Therefore, the Department is not
adopting the proposed addition to 7 CFR 273.9(c)(3).
Allowable Expenses
Mandatory School Fees
The November 1, 1993, rule proposed to expand the definition of
mandatory school fees to include the costs of rental or purchase of
equipment, materials, and supplies related to the pursuit of the course
of study involved. Two commenters supported this change. This provision
is specifically provided for in the Mickey Leland Act. The provision is
being adopted as final at 7 CFR 273.9(c)(3).
Miscellaneous Personal and Normal Living Expenses
The November 1, 1993, rule proposed at 7 CFR 273.9(c)(3) to allow
an educational income exclusion based on earmarking or use for
miscellaneous personal expenses.
The proposed rule used the definition of miscellaneous personal
expenses as set forth in Section 5(d) of the Food Stamp Act: expenses
(other than normal living expenses) of the student incidental to
attending such school, institution or program. The Department
interpreted this definition of miscellaneous personal expenses as
meaning things such as subscriptions to educational publications or
dues for a professional association. The Department defined normal
living expenses as food, rent, board, clothes, laundry, haircuts and
personal hygiene items.
The Department received three comments regarding this proposal. In
general, the commenters were opposed to the revised definitions of
miscellaneous personal and normal living expenses. One commenter
suggested that all items other than room and board should be considered
miscellaneous personal expenses. Another commenter suggested that since
the Perkins Act defines miscellaneous personal expenses as ``other than
room and board'', at least for assistance provided under the Perkins
Act, miscellaneous personal expenses should be defined as such.
The Department believes that using the same definitions for
educational income received from various sources will simplify the
treatment of educational assistance. The Food Stamp Act offers the
Department some discretion in this area. Therefore, the Department has
decided to adopt one of the commenter's suggestions and revise its
definition of miscellaneous personal expenses and normal living
expenses. In this final rule at 7 CFR 273.9(c)(3), miscellaneous
personal expenses will include all personal expenses other than room
and board. Normal living expenses will include only room and board.
Handling of Normal Living Expenses
As mentioned above, normal living expenses, defined as room and
board, are not excludable. The November 1, 1993, rule proposed at 7 CFR
273.9(c)(3) that amounts earmarked as miscellaneous personal expenses
which were obviously intended for normal living expenses shall not be
excluded. It has come to the Department's attention that the grantor
often cannot delineate any further sums earmarked for miscellaneous
personal expenses. If delineation is not possible, the entire amount
earmarked for miscellaneous personal expenses is excludable. Therefore,
the Department is not adopting the proposed change. Instead the
Department is instructing States to refer to 273.9(c)(3), as revised by
this rule, and exclude all amounts earmarked for miscellaneous personal
expenses.
Dependent Care
The November 1, 1993, rule proposed at 7 CFR 273.9(c)(3) to allow
an exclusion from educational assistance for amounts earmarked or used
for dependent care. The Department received two comments in support of
this provision. It is being adopted final at 7 CFR 273.9(c)(3).
The rule also proposed to amend 7 CFR 273.10(d)(1)(i) to prohibit
amounts excluded from educational income for dependent care costs
pursuant to 7 CFR 273.9(c)(3) from also being deducted from income
under the current provision at 7 CFR 273.9(d)(4). Two commenters
supported this provision. It has come to the Department's attention
that there are expenses other than dependent care which should be
subject to the same restrictions. Therefore, this final rule amends 7
CFR 273.10(d)(1)(i), adding a more general phrase providing that any
expense, in whole or part, covered by educational income which has been
excluded pursuant to the provisions of 7 CFR 273.9(c)(3) shall not be
deductible.
One commenter suggested that the Department clarify that there is
no maximum amount of dependent care that can be excluded. The
Department intended that there should be no limit as to the amount of
dependent care expenses that may be excluded from educational
assistance based on earmarking. However, if a student pays more for
dependent care than is earmarked, the additional amount may be deducted
in accordance with 7 CFR 273.9(d)(4). This additional amount is then
subject to 7 CFR 273.9(d)(4) which provides for a maximum limit per
dependent. The final rule, at 7 CFR 273.9(c)(3), provides that
dependent care costs which exceed the amount excludable from income
shall be deducted from income in accordance with paragraph 7 CFR
273.9(d)(4) and be subject to a cap.
In the preamble of the proposed rule, the Department stated its
intention to include a provision that would prohibit amounts excluded
from educational assistance for dependent care from also being excluded
under the general reimbursement provision at 7 CFR 273.9(c)(5)(i)(C).
No comments opposed this provision. However, this provision was
inadvertently left out of the proposed regulation itself. Therefore,
this rule, at 7 CFR 273.9(c)(3) includes a provision stating that
amounts excluded for dependent care costs under the provisions of 7 CFR
273.9(c)(3) shall not be excluded under the general exclusion
provisions of paragraph 7 CFR 273.9(c)(5)(i)(C).
Exclusions From Income
Types of Schools
The November 1, 1993, rule proposed at 7 CFR 273.9(c)(3) two
additional types of educational programs which qualify a student for
income exclusions based on allowable educational expenses: (1)
vocational and technical schools, and (2) any program in which students
would receive a high school diploma or its equivalent.
The Department received three comments supporting the proposed
revision. Accordingly, the language is being adopted as final without
change at 7 CFR 273.9(c)(3).
In the preamble of the proposed rule, the Department stated its
intention to retain the definition of an institution of post-secondary
education. However, this definition was inadvertantly left out of the
the proposed regulations itself.
[[Page 54295]]
Therefore, this final rule, at 7 CFR 273.9(c)(3), retains the
definition of post-secondary education currently in the regulations.
Order of Income Exclusions
The November 1, 1993, rule proposed to totally revise 7 CFR
273.9(c)(3) to include a three-part procedure for excluding educational
assistance. The first step was to totally exclude all educational
income excluded by other Federal laws. The second step was to exclude
allowable educational expenses based on earmarking. The third step was
to exclude allowable educational expenses the student could verify were
used for excludable expenses. If earned educational income such as work
study were involved, the expenses would be excluded from unearned
educational income first and the remainder of the expenses would be
excluded from earned educational income.
The Department received nine comments on this proposal. Three
supported the income exclusion process as written. Six opposed the
process for various reasons. For example, they found the process
unnecessarily complex, unjustifiably error-prone, and difficult to
automate. All six suggested alternative ways of determining the amount
of countable student assistance.
In light of the alternative processes suggested by the commenters
and within the context of the Regulatory Reform Initiative, the
Department has decided to give States the flexibility to design
procedures for excluding student assistance that are more appropriate
to their specific circumstances. Therefore, the Department is not
adopting the proposed provision on the process that States must follow
to exclude income, but is amending 7 CFR 273.9(c)(3) to include
provisions on what shall be excluded, as explained in further detail
below.
Amounts Excluded by Other Federal Laws
The November 1, 1993, rule proposed to amend 7 CFR 273.9(c)(3) to
include a provision that States shall first exclude all educational
income specifically excluded from consideration as income by other
Federal statutes. The regulations at 7 CFR 273.9(c)(10) already provide
for this. The Department has decided that to include a similar
provision in 7 CFR 273.9(c)(3) would be redundant. Therefore, the
Department is not adopting the proposed provision and is instead
instructing States to abide by 7 CFR 273.9(c)(10).
Amounts Earmarked for Allowable Expenses
The November 1, 1993, rule proposed to amend 7 CFR 273.9(c)(3) to
include a provision that after excluding amounts excluded by other
Federal law, States shall then exclude educational assistance
identified (earmarked) by the institution, program or other grantor for
the specific costs of tuition, mandatory school fees (including the
rental or purchase of any equipment, materials, and supplies related to
the pursuit of the course of study involved), books, supplies,
dependent care, transportation, and miscellaneous personal expenses
(other than normal living expenses).
The Department received two comments regarding earmarking, each
suggesting different ways States could determine what constitutes
earmarking. The comments illustrate that each institution, program or
grantor earmarks student assistance differently. Since the Food Stamp
Act does not specify how this assistance is to be earmarked, the
Department has decided to give States the flexibility to decide what
constitutes earmarking.
One commenter wanted to verify that the institution, school,
program, or grantor is able to earmark allowable expenses. It was
always the Department's intention that this be the case as it is
clearly stated in the Food Stamp Act that amounts identified by the
school, institution, program, or other grantor as allowable expenses
shall be excluded.
The Department received four comments disagreeing with the proposal
to allow multiple exclusions based on earmarking. For example, when a
student receives two grants earmarked for tuition costs, both amounts
earmarked for tuition shall be excluded, even though the total may be
greater than the amount of the tuition. However, Section 5(d) of the
Food Stamp Act, as amended, states that amounts made available as an
allowance (earmarked) for tuition, mandatory fees, books, supplies,
transportation and other miscellaneous personal expenses, must be
excluded regardless of whether or not the grants were actually used to
pay all or part of these expenses. The Department does not have the
discretion to adopt these comments.
The proposed provision to exclude earmarked amounts is being
adopted as final at 7 CFR 273.9(c)(3) with a modification. The
Department is not adopting the provision that states shall exclude
these amounts first.
Exclusions Based on Use
The November 1, 1993, rule proposed to allow an exclusion of
educational assistance if the student could show it was used for
allowable expenses, or if the amount used was in excess of earmarked
amounts. The Department received one comment disagreeing with the
proposal to allow an exclusion based on use if a grant has already been
earmarked for the same expense. However, the Food Stamp Act of 1977, as
amended, specifically states that an exclusion shall be granted for
allowable expenses to the extent that they do not exceed the amount
used for or made available for allowable expenses.
This final rule at 7 CFR 273.9(c)(3) states that amounts used for
the allowable expenses of tuition, mandatory fees (including the rental
or purchase of any equipment, materials, and supplies related to the
pursuit of the course of study involved), books, supplies, dependent
care, transportation, or miscellaneous personal expenses (other than
normal living expenses which are room and board) of the student
incidental to attending a school, institution or program shall be
excluded.
Additional Educational Assistance Issues
Income Averaging
The November 1, 1993, rule proposed in 7 CFR 273.9(c)(3) to include
a provision on income averaging. However, 7 CFR 273.10(c)(3)(iii)
already addresses income averaging. The Department has decided that it
is redundant to address income averaging in two places. Therefore, in
this final rule, this provision is incorporated into the educational
proration provision at 7 CFR 273.10(c)(3)(iii).
The November 1, 1993, rule proposed that the first month
educational income would be counted is the month in which it is
received, although it would still be prorated over the period it is
intended to cover. One State agency supported prorating the income over
the period it is intended to cover, but said that not counting it until
the student receives it would require additional reporting by the
student. The State agency suggested budgeting student income when it
has been approved rather than when it is received.
The Department disagrees with the recommendation of the commenter
because it would result in students having income counted before it is
received. However, the Department would like to avoid imposing
burdensome requirements on households or eligibility workers.
[[Page 54296]]
Therefore, the Department has decided to amend 7 CFR 273.10(c)(3)(iii)
to give States the option of counting the income either in the month it
is received, or in the month the household anticipates receiving it or
receiving the first installment payment, although it would still be
prorated over the period it is intended to cover.
The November 1, 1993, rule also proposed at 7 CFR 273.9(c)(3) that
when work study income (earned educational income) is received monthly
and costs of attendance are incurred on a less frequent basis, the
State agency would anticipate the work study income for the appropriate
quarter, semester, or year; exclude the allowable costs; and prorate
the remainder over the quarter, semester, or year. One commenter
supported treating work study income the same way as unearned
educational assistance and prorating it over the period it is intended
to cover.
One commenter objected to this proposal because eligibility workers
are not in the position to anticipate anything beyond the amount
verified by the institution. This same commenter suggested that the
regulations should mandate the use of the verified amount.
The Department believes that, in the interest of consistency, work
study income should be treated the same way as unearned educational
income. States may count it in the month it is received, or count it
the month the household anticipates receiving it or receiving the first
installment payment, although it is still prorated over the period it
is intended to cover.
The final rule amends 7 CFR 273.(10)(c)(3)(iii) to provide that
earned and unearned educational income, after allowable exclusions,
shall be averaged over the period it is intended to cover. The first
month that educational income shall be counted is either the month in
which the income or the first installment payment is received, or the
month in which the income or first installment payment is anticipated
to be received, although it is still prorated over the period it is
intended to cover.
Loans
The November 1, 1993, rule proposed to revise 7 CFR 273.9(c)(4) so
that educational loans on which repayment is deferred shall be excluded
pursuant to the provisions of 7 CFR 273.9(c)(3) and that a loan on
which repayment must begin within 60 days after receipt would not be
considered a deferred repayment loan.
One commenter pointed out that this provision was not discussed in
the preamble. This provision was included in the proposed rule for
comment because it had previously come up as a policy inquiry.
Repayment for most types of Federal loans for education is deferred
until after the student graduates or until the student drops out of
school. On most non-deferred repayment loans, repayment must begin
within 60 days of receipt and is therefore, not excludable. The
Department is adopting the proposed provision with a modification at 7
CFR 273.9(c)(4). Reference to 7 CFR 273.9(c)(10)(xi) will no longer be
included because this final rule deletes this section.
Reimbursements
The November 1, 1993, rule proposed at 7 CFR 273.9(c)(5) that
educational assistance provided for normal living expenses could not be
excluded under the reimbursement provision and that all other
reimbursements or allowances for educational assistance would be
handled under the educational income exclusion section.
The Department realizes that it is not necessary to list each type
of educational assistance. Therefore, in this rule at 7 CFR
273.9(c)(5)(ii)(B), the list of educational income sources in the first
sentence has been removed and a general reference to educational
assistance has been added. Also, for the purpose of clarity, the
definition of normal living expenses (room and board) has been added.
Retrospective Budgeting
One commenter requested that the regulations allow State agencies
to retrospectively budget work study and fellowships as well as other
educational assistance. A rule titled ``Miscellaneous Provisions of the
Food, Agriculture, Conservation, and Trade Act Amendments of 1991 and
Earned Income Tax Credit Amendment'' published August 29, 1994, changed
the regulations to allow educational income (nonexcluded scholarships,
deferred educational loans, and other educational grants) to be
budgeted either prospectively or retrospectively. However, the
Department agrees that, in the interest of consistency, earned
educational income should be treated the same as unearned educational
income. Accordingly, this rule revises 7 CFR 273.21(f)(2)(iii) so that
earned and unearned educational income is required to be prorated over
the period it is intended to cover in accordance with 7 CFR
273.10(c)(3)(iii) and it shall be budgeted either prospectively or
retrospectively.
Verification
The November 1, 1993, rule proposed to include verification
requirements for student income at 7 CFR 273.9(c)(3). The Department
received six comments concerning this proposal. Two supported these
provisions. Three suggested different procedures for verifying student
income. One suggested the verification requirements be placed in one
section of the regulations. The Department agrees with this commenter.
Verification requirements are already outlined in 7 CFR 273.2(f). To
include separate verification requirements for student income would be
redundant. Therefore, the Department has decided not to adopt the
verification procedures as proposed. Instead, it is instructing States
to follow the verification requirements already outlined in 7 CFR
273.2(f).
Technical Changes
The reference to Section 1345(c) at 7 CFR 273.8 should have been
1343(c). The Department is correcting the reference in this rule.
Implementation
State welfare agencies have been instructed through agency
directive to implement the provisions of the following laws as of the
statutory effective dates without waiting for formal regulations: the
Higher Education Act Amendments of 1986, as amended in 1987, for the
1988-89 school year; the Perkins Act on July 1, 1991; the Mickey Leland
Act (as amended by the 1991 Technical Amendments to the Food Stamp Act)
on February 1, 1992, and the exclusions contained in the Higher
Education Act Amendments of 1992 for the Tribal Development Student
Assistance Revolving Loan Program on October 1, 1992, and for Title IV
and BIA student assistance on July 1, 1993.
One commenter asked if the Title IV and BIA exclusion applies to
school periods beginning after July 1, 1993, or to income received
after that date. It applies to income received for school periods
beginning on or after July 1, 1993. The law specifically provides that
the exclusion shall apply to award years beginning after July 1, 1993.
Pursuant to Public Law 104-121, the Contract with America
Advancement Act of 1996, this final rule is effective December 16,
1996; State agencies must implement it no later than March 1, 1997.
State agencies will be required to adjust the cases of ongoing
households at the next recertification, at household request, or when
the case is next
[[Page 54297]]
reviewed, whichever comes first. If implementation of the above Acts or
this rule is delayed, benefits shall be restored, as appropriate, in
accordance with the Food Stamp Act.
The preamble to the proposed rule provided that any variance
resulting from implementation of the provision of the subsequent final
rule would be excluded from error analysis for 90 days from the
specified implementation dates of such final rule.
One commenter pointed out that the grace period should be 120 days.
Section 13951 of the Mickey Leland Childhood Hunger Relief Act, P.L.
102-66, enacted August 10, 1993, excludes from the payment error rate
any errors resulting in the application of new procedures for 120 days
from date of publication. Accordingly, variances resulting form
implementation of the provisions of the final rule are excluded from
error analysis for 120 days from March 1, 1997.
List of Subjects
7 CFR Part 272
Alaska, Civil rights, Food stamps, Grant programs--social programs,
Reporting and recordkeeping requirements.
7 CFR Part 273
Administrative practice and procedures, Aliens, Claims, Food
stamps, Fraud, Grant programs--social programs, Penalties, Reporting
and recordkeeping requirements, Social Security, Students.
Accordingly, 7 CFR Parts 272 and 273 are amended as follows:
1. The authority citation for Parts 272 and 273 continues to read
as follows:
Authority: 7 U.S.C. 2011-2032.
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
2. In Sec. 272.1, a new paragraph (g)(149) is added to read as
follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(149) Amendment No. 374. The Higher Education Act Amendments of
1986, as amended in 1987, were effective and required to be implemented
for the 1988-89 school year; the Perkins Act was effective and required
to be implemented on July 1, 1991; the Mickey Leland Act (as amended by
the 1991 Technical Amendments to the Food Stamp Act) was effective and
required to be implemented on February 1, 1992, and the exclusions
contained in the Higher Education Act Amendments of 1992 for the Tribal
Development Student Assistance Revolving Loan Program were effective
and required to be implemented on October 1, 1992, and for Title IV and
BIA student assistance on July 1, 1993. The provisions of Amendment No.
374 are effective December 16, 1996 and must be implemented by March 1,
1997. The current caseload shall be converted to these provisions at
the household's request, at the time of recertification, or when the
case is next reviewed, whichever occurs first. If implementation of the
acts referenced in this paragraph or this amendment is delayed,
benefits shall be restored, as appropriate, in accordance with the Food
Stamp Act. Any variance resulting from implementation of this amendment
shall be excluded from error analysis for 120 days from March 1, 1997.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
3. In Sec. 273.8, paragraph (e)(11)(x) is removed.
4. In Sec. 273.9:
a. A new paragraph (b)(1)(vi) is added;
b. paragraph (b)(2)(iv) is amended by removing ``fellowships'' and
adding the phrase ``, other than educational assistance with a work
requirement,'' after the word ``like'';
c. paragraph (c)(3) is revised;
d. paragraph (c)(4) is amended by removing all text appearing after
the first sentence and adding two new sentences to the end of the
paragraph.
e. paragraph (c)(5)(i) is amended by removing paragraph
(c)(5)(i)(D) and redesignating paragraphs (c)(5)(i)(E), (c)(5)(i)(F)
and (c)(5)(i)(G) as paragraphs (c)(5)(i)(D), (c)(5)(i)(E) and
(c)(5)(i)(F), respectively;
f. paragraph (c)(5)(ii) is amended by revising paragraph
(c)(5)(ii)(B) and by removing paragraph (c)(5)(ii)(C);
g. paragraph (c)(10)(xi) is removed.
The revisions and additions read as follows:
Sec. 273.9 Income and deductions.
* * * * *
(b) Definition of income. * * *
(1) * * *
(vi) Educational assistance which has a work requirement (such as
work study, an assistantship or fellowship with a work requirement) in
excess of the amount excluded under Sec. 273.9(c)(3).
* * * * *
(c) Income exclusions. * * *
(3)(i) Educational assistance, including grants, scholarships,
fellowships, work study, educational loans on which payment is
deferred, veterans' educational benefits and the like.
(ii) To be excluded, educational assistance referred to in
paragraph (c)(3)(i) must be:
(A) Awarded to a household member enrolled at a:
(1) Recognized institution of post-secondary education (meaning any
public or private educational institution which normally requires a
high school diploma or equivalency certificate for enrollment or admits
persons who are beyond the age of compulsory school attendance in the
State in which the institution is located, provided that the
institution is legally authorized or recognized by the State to provide
an educational program beyond secondary education in the State or
provides a program of training to prepare students for gainful
employment, including correspondence schools at that level),
(2) School for the handicapped,
(3) Vocational education program,
(4) Vocational or technical school,
(5) Program that provides for obtaining a secondary school diploma
or the equivalent;
(B) Used for or identified (earmarked) by the institution, school,
program, or other grantor for the following allowable expenses:
(1) Tuition,
(2) Mandatory school fees, including the rental or purchase of any
equipment, material, and supplies related to the pursuit of the course
of study involved,
(3) Books,
(4) Supplies,
(5) Transportation,
(6) Miscellaneous personal expenses, other than normal living
expenses, of the student incidental to attending a school, institution
or program,
(7) Dependent care,
(8) Origination fees and insurance premiums on educational loans,
(9) Normal living expenses which are room and board are not
excludable.
(10) Amounts excluded for dependent care costs shall not also be
excluded under the general exclusion provisions of paragraph
Sec. 273.9(c)(5)(i)(C). Dependent care costs which exceed the amount
excludable from income shall be deducted from income in accordance with
paragraph Sec. 273.9(d)(4) and be subject to a cap.
(iii) Exclusions based on use pursuant to paragraph (c)(3)(ii)(B)
must be incurred or anticipated for the period the educational income
is intended to cover regardless of when the educational income is
actually received. If a student uses other income sources to pay for
allowable educational expenses in months before the educational income
is received, the
[[Page 54298]]
exclusions to cover the expenses shall be allowed when the educational
income is received. When the amounts used for allowable expense are
more than amounts earmarked by the institution, school, program or
other grantor, an exclusion shall be allowed for amounts used over the
earmarked amounts. Exclusions based on use shall be subtracted from
unearned educational income to the extent possible. If the unearned
educational income is not enough to cover the expense, the remainder of
the allowable expense shall be excluded from earned educational income.
(iv) An individual's total educational income exclusions granted
under the provisions of paragraph (c)(3)(i) through (c)(3)(iii) of this
section cannot exceed that individual's total educational income which
was subject to the provisions of paragraph (c)(3)(i) through
(c)(3)(iii) of this section.
(4) * * * Educational loans on which repayment is deferred shall be
excluded pursuant to the provisions of Sec. 273.9(c)(3)(i). A loan on
which repayment must begin within 60 days after receipt of the loan
shall not be considered a deferred repayment loan.
(5) * * *
(ii) * * *
(B) No portion of any educational assistance that is provided for
normal living expenses (room and board) shall be considered a
reimbursement excludable under this provision.
* * * * *
5. In Sec. 273.10, paragraph (c)(3)(iii) is revised and a new
sentence is added to the beginning of paragraph (d)(1)(i). The addition
and revision read as follows:
Sec. 273.10 Determining household eligibility and benefit levels.
* * * * *
(c) Determining income. * * *
(3) Income averaging. * * *
(iii) Earned and unearned educational income, after allowable
exclusions, shall be averaged over the period which it is intended to
cover. Income shall be counted either in the month it is received, or
in the month the household anticipates receiving it or receiving the
first installment payment, although it is still prorated over the
period it is intended to cover.
(d) Determining deductions. * * *
(1) Disallowed expenses.
(i) Any expense, in whole or part, covered by educational income
which has been excluded pursuant to the provisions of Sec. 273.9(c)(3)
shall not be deductible. * * *
* * * * *
6. In Sec. 273.21, the first sentence in paragraph (f)(2)(iii) is
revised to read as follows:
Sec. 273.21 Monthly Reporting and Retrospective Budgeting (MRRB).
* * * *
(f) Calculating allotments for households following the beginning
months. * * *
(2) Income and deductions. * * *
(iii) Earned and unearned educational income shall be prorated over
the period it is intended to cover in accordance with
Sec. 273.10(c)(3)(iii), and it shall be budgeted either prospectively
or retrospectively. * * *
* * * * *
Dated: September 26, 1996.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 96-26070 Filed 10-16-96; 8:45 am]
BILLING CODE 3410-30-U
