[Federal Register Volume 59, Number 228 (Tuesday, November 29, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29118]
[[Page Unknown]]
[Federal Register: November 29, 1994]
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Part VIII
Department of Education
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34 CFR Part 668
Student Assistance General Provisions; Final Rule
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DEPARTMENT OF EDUCATION
34 CFR PART 668
RIN 1840-AC10
Student Assistance General Provisions
Agency: Department of Education.
Action: Final regulations.
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Summary: The Secretary amends the Student Assistance General Provisions
regulations, Verification of Student Aid Application Information, to
conform them to the new Federal Pell Grant Program regulations, to
clarify the calculation of the net tolerance option, to implement
technical revisions resulting from the Higher Education Amendments of
1992 and the Higher Education Technical Amendments of 1993, and to
reduce the administrative burden associated with verification
requirements on applicants and institutions. These regulations require
institutions to have a system for verifying student aid application
information reported by applicants for use in calculating expected
family contributions (EFCs) for the Federal Pell Grant, campus-based
(Federal Perkins Loan, Federal Work-Study (FWS), and Federal
Supplemental Educational Opportunity Grant (FSEOG)), Federal Stafford
Loan, and William D. Ford Federal Direct Loan.
EFFECTIVE DATE: These regulations take effect on July 1, 1995. When
these regulations become effective, they will govern verification of
student aid application information for any title IV, HEA program
assistance that may be awarded to any student for award years beginning
with 1995-96.
FOR FURTHER INFORMATION CONTACT: Lorraine Kennedy, U.S. Department of
Education, 600 Independence Avenue, S.W., Regional Office Building 3,
Room 4318, Washington, D.C. 20202-5451. Telephone (202) 708-4601.
Individuals who use a telecommunications device for the deaf (TDD) may
call the Federal Information Relay Service (FIRS) at 1-800-877-8339
between 8 a.m. and 8 p.m., Eastern time, Monday through Friday.
SUPPLEMENTARY INFORMATION: Subpart E of the Student Assistance General
Provisions regulations (34 CFR Part 668) governs the verification of
the information that is used to calculate an applicant's expected
family contribution (EFC) as part of the determination of an
applicant's need for student financial assistance. Based on the need
analysis formula established in statute, the EFC is the amount that an
applicant and the applicant's family can reasonably be expected to
contribute toward the applicant's cost of attendance at an institution
of higher education.
The changes in these regulations result from a review of current
policies and procedures and from recently enacted legislation.
The Secretary has determined that an increase in the verification
limitation percentage above 30% would increase the administrative
burden for all institutions participating in the title IV programs. The
30% limitation percentage provides an appropriate balance between
budget cost savings and institutional burden. The Secretary, in section
668.54, provides clarification of when an institution has performed its
30% limitation for each award year.
The Secretary, in an effort to relieve burden, has revised the
updating requirements in Sec. 668.55(b) to remove the requirement that
an applicant update his or her application information at the time the
applicant verifies the information or submits his or her SAR.
The Secretary proposed to amend Sec. 668.56(a)(5)(i) in a Notice of
Proposed Rulemaking published in the Federal Register on April 28, 1994
(59 FR 22066) to further clarify the Department's policy for
verification of Social Security benefits. The Department does not
require an institution to document receipt of Social Security benefits
simply because there is an amount indicated on the application.
Documentation is only required if the institution has reason to believe
that the amount reported is incorrect, or that the student or family is
receiving Social Security benefits that are not being reported.
On April 28, 1994, and June 22, 1994, the Secretary published
notices of proposed rulemaking (NPRMs) for part 668 in the Federal
Register (59 FR 22070 and 59 FR 32264). The NPRMs included a discussion
of the major issues raised by the proposed changes. The following list
summarizes those issues and identifies the pages of the preambles to
the NPRMs on which discussion of those issues may be found.
Section 668.54 would be amended to place a limitation on the
percentage of the total applicants whose applications would be required
to be verified annually by an institution during the award year (page
22070).
Section 668.57(c) would be amended to require the signature of the
applicant and one parent of the dependent student instead of requiring
signatures of both parents (page 32264).
Section 668.59 would be amended to change the amount of the dollar
tolerance option for the Federal Pell Grant, Federal Stafford Loan,
William D. Ford Federal Direct Loan, and campus-based programs. These
regulations would require a $400 tolerance option to be used for all
title IV, HEA programs in place of the current $200 Pell and $800
Stafford Loan and campus-based tolerance options. The Higher Education
Amendments of 1992 provided for a single formula for establishing need
for all title IV student financial assistance programs, so a single
tolerance level would minimize calculations and burden (page 22070).
Analysis of Comments and Changes
In response to the Secretary's invitation in the NPRMs, 74 parties
submitted comments on the proposed regulations. An analysis of the
comments and of the changes made in the regulations in response to
those comments follows.
Substantive issues are discussed under the regulations to which
they pertain. Technical and other minor changes--and suggested changes
that the Secretary is not legally authorized to make under the
applicable statutory authority--are not addressed.
Section 668.54 Selection of Applications for Verification
Comments: Several commenters opposed the requirement to verify more
than 30% of the applications received by the institution. Several other
commenters suggested that institutions should be required to verify
less than 30% of the total applications. One commenter suggested 100%
verification of all applicants selected for verification and does not
foresee any added verification problems from this approach.
Discussion: Section 484(f) of the Higher Education Act of 1965, as
amended, was deleted by the Higher Education Technical Amendments of
1993. Although the Secretary now has the authority to require
institutions to verify up to 100% of the applications selected for
verification on the basis of selection edits, the Secretary has not
made a determination that responsible management of the programs
requires 100% verification of selected applications. However, the
Secretary will undertake additional studies to include an analysis of
data to determine costs to Federal government, as well as, costs and
burden to institutions, students, and families, and will consider
changes to the selection percentage at a later time. At the present
time, the Secretary believes that any verification limitation
percentage less than 30% of total applicants received by the
institution would compromise the Department's ability to detect
significant levels of error in title IV applications and to prevent
subsequent overawards and underawards. However, an institution is not
limited to the verification of 30% of its applicants and may choose to
verify a higher percentage of applicants, if the institution believes a
higher percentage is necessary to accurately administer the student
financial assistance programs.
Changes: Section 668.54 has been revised to provide that no
institution is required to verify the applications of more than 30% of
the total applications for title IV assistance received by the
institution in any award year.
Section 668.57(c) Acceptable Documentation
Comments: Several commenters concurred with the Secretary's
proposal to require the signature of one parent instead of both parents
of the dependent applicant for verification of household size and
number of family members enrolled in a postsecondary educational
institution. Two commenters suggested that the Secretary could remove
additional burden for applicants, parents, and institutions, if the
Secretary deleted the provision requiring the parent whose income is
used in calculating need to be the parent that signs these verification
statements.
Discussion: The Secretary agrees that additional burden is imposed
by requiring the signature of a specified parent rather than would be
the case if either parent's signature is acceptable. Since this burden
probably outweighs any benefit derived from requiring the signature of
the responsible parent, the Secretary has decided to remove the
proposed provisions requiring the income producing parent to sign these
statements and, instead, will allow a signature from either parent.
Changes: Section 668.57(c) has been revised to require the
signature of the applicant and one parent of dependent students,
without regard to which parent's income was used in calculating need,
to verify household size and number of family members enrolled in a
postsecondary educational institution.
Section 668.59 Consequences of a Change in Application Information
Comments: A number of commenters agreed with the proposed $400
tolerance for all title IV, HEA programs. Several commenters felt that
the $400 tolerance will improve consistency across title IV, HEA
programs and reduce overawards. Two commenters stated that the change
will make it easier for institutions to administer financial aid.
A few commenters proposed that the tolerance be placed at $600
rather than $400 to reduce the number of cases in which a financial aid
officer would need to recalculate an award. Two commenters stated that
a $600 tolerance is appropriate for consistency in applying tolerance
levels, and because multitude of variables used in calculating student
need justifies a higher tolerance amount. One commenter stated that
students who file for financial aid early use estimated IRS tax forms
and that many taxpayers do not file tax returns in January, so that the
$400 tolerance will result in an increased number of recalculated
financial aid forms. Three commenters supported retaining the current a
$200 tolerance for the Federal Pell Grant and $800 tolerance for the
Federal Stafford Loan and campus-based programs.
Discussion: The Secretary agrees with the commenters concerning the
desirability of minimizing recalculations and burden, but is also
concerned about the accuracy of title IV, HEA awards. The Secretary has
determined that $400 is the appropriate tolerance amount for errors in
single dollar items in the title IV, HEA programs rather than $600,
because a $400 error in any given dollar item is the largest error that
would not result in a change in the applicant's award. The Secretary
recognizes that the lower tolerance amount represents a relatively
higher level of burden, and has decided to partially offset the higher
burden through use of a net tolerance. In this calculation, the
tolerance amount shall be the difference between the corrected sum of
AGI plus untaxed income minus U.S. income taxes paid and the
uncorrected sum of AGI plus untaxed income minus U.S. income taxes
paid. For example, a student's $2500 AGI is corrected to read $3000,
and the student's $300 entry for U.S. income taxes paid is corrected to
read $400. The student's untaxed income remains the same in both
calculations at $300. Therefore, the student's corrected sum of AGI
plus untaxed income minus U.S. income taxes paid is $2900, and the
student's uncorrected sum using the same calculation is $2500, leaving
a net difference of $400, which is within the allowable tolerance.
Therefore, the Secretary has decided to adopt the proposed $400
tolerance for all title IV, HEA programs in Sec. 668.59, as published
in the NPRM. The Secretary considers the value of this simplification
of the regulations to outweigh any potential loss of flexibility.
Changes: Section 668.59 has been revised to provide for a $400 net
tolerance option for all applications for title IV, HEA programs with
dollar errors.
Executive Order 12866
These regulations have been reviewed in accordance with Executive
Order 12866. Under the terms of the order the Secretary has assessed
the potential costs and benefits of this regulatory action.
The potential costs associated with the proposed regulations are
those resulting from statutory requirements and those determined by the
Secretary to be necessary for administering this program effectively
and efficiently.
In assessing the potential costs and benefits--both quantitative
and qualitative--of these final regulations, the Secretary has
determined the benefits of the final regulations justify the costs.
The Secretary has also determined that this regulatory action does
not unduly interfere with State, local, and tribal governments in the
exercise of their governmental functions.
Assessment of Educational Impact
In the notice of proposed rulemaking, the Secretary requested
comments on whether the proposed regulations would require transmission
of information that is being gathered by or is available from any other
agency or authority of the United States.
Based on the response to the proposed rules and on its own review,
the Department has determined that the regulations in this document do
not require transmission of information that is being gathered by or is
available from any other agency or authority of the United States.
List of Subjects in 34 CFR Part 668
Administrative practice and procedure, Colleges and Universities,
Consumer protection, Education, Grant programs--education, Loan
programs--education, Reporting and recordkeeping requirements, Student
aid.
(Catalog of Federal Domestic Assistance Numbers: Federal
Supplemental Educational Opportunity Grant Program, 84.007; Federal
Stafford Loan Program, 84.032; Federal PLUS Loan Program, 84.032;
Federal Work-Study Program, 84.033; Federal Perkins Loan Program,
84.038; Federal Pell Grant Program, 84.063; William D. Ford Federal
Direct Loan Program, 84.268)
Dated: November 21, 1994.
Richard W. Riley,
Secretary of Education.
The Secretary amends Part 668 of Title 34 of the Code of Federal
Regulations as follows:
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS
1. The authority citation for Part 668 continues to read as
follows:
Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, and 1141,
unless otherwise noted.
2. Section 668.52 is amended by revising the definition of
``Institutional student information report'' to read as follows:
Sec. 668.52 Definitions.
* * * * *
Institutional student information report as defined in 34 CFR 690.2
for purposes of the Federal Pell Grant, campus-based, Federal Stafford
Loan, and William D. Ford Federal Direct Loan programs.
* * * * *
3. Section 668.53 is amended by revising paragraphs (a)(3) and
(a)(5) to read as follows:
Sec. 668.53 Policies and procedures.
(a) * * *
(3) The method by which the institution notifies an applicant of
the results of verification if, as a result of verification, the
applicant's EFC changes and results in a change in the applicant's
award or loan;
* * * * *
(5) The procedures for making referrals under Sec. 668.16.
* * * * *
4. Section 668.54 is amended by revising paragraphs (a)(2) and
(b)(2)(v), by redesignating paragraphs (b)(2)(vi) and (b)(2)(vii) as
paragraphs (b)(2)(vii) and (b)(2)(viii), by adding a new paragraph
(b)(2)(vi), and by revising redesignated paragraph (b)(2)(viii) to read
as follows:
Sec. 668.54 Selection of applications for verification.
(a) * * *
(2)(i) An institution shall require each applicant whose
application is selected for verification on the basis of edits
specified by the Secretary, to verify all of the applicable items
specified in Sec. 668.56, except that no institution is required to
verify the applications of more than 30 percent of its total number of
applicants for assistance under the Federal Pell Grant, Federal Direct
Student Loan, campus-based, and Federal Stafford Loan programs in an
award year.
(ii) An institution may only include those applicants selected for
verification by the Secretary in its calculation of 30 percent of total
applicants.
(b) * * *
(2) * * *
(v) An applicant whose parents' address is unknown and cannot be
obtained by the applicant.
(vi) An applicant who is a dependent student, both of whose parents
are deceased or are physically or mentally incapacitated.
* * * * *
(viii) An applicant who transfers to the institution, had
previously completed the verification process at the institution from
which he or she transferred, and applies for assistance on the same
application used at the previous institution, if the current
institution obtains a letter from the previous institution stating that
it has verified the applicant's information, the transaction number of
the verified application, and, if relevant, the provision used in
Sec. 668.59 for not recalculating the applicant's EFC.
* * * * *
5. Section 668.55 is amended by revising paragraph (b) to read as
follows:
Sec. 668.55 Updating information.
* * * * *
(b) If the number of family members in the applicant's household or
the number of those household members attending postsecondary
educational institutions changes for a reason other than a change in
the applicant's marital status, an applicant who is selected for
verification shall update the information contained in his or her
application regarding those factors so that the information is correct
as of the day the applicant verifies the information.
* * * * *
6. Section 668.56 is amended by revising paragraph (a)(5)(i) to
read as follows:
Sec. 668.56 Items to be verified.
(a) * * *
(5) * * *
(i) Social Security benefits if the institution has reason to
believe that those benefits were received and were not reported or were
incorrectly reported;
* * * * *
7. Section 668.57 is amended by revising paragraphs (a)(3)
introductory text, (c)(1) introductory text, and (d)(2) to read as
follows:
Sec. 668.57 Acceptable documentation.
(a) * * *
(3) An institution shall accept, in lieu of an income tax return or
an IRS listing of tax account information of an individual whose income
was used in calculating the EFC of an applicant, the documentation set
forth in paragraph (a)(4) of this section if the individual for the
base year--
* * * * *
(c) Number of family household members enrolled in postsecondary
institutions. (1) Except as provided in Sec. 668.56(b), (c), (d), and
(e), an institution shall require an applicant selected for
verification to verify annually information included on the application
regarding the number of household members in the applicant's family
enrolled on at least a half-time basis in postsecondary institutions.
The institution shall require the applicant to verify the information
by submitting a statement signed by the applicant and one of the
applicant's parents, if the applicant is a dependent student, or by the
applicant, and the applicant's spouse, if married, if the applicant is
an independent student, listing--
* * * * *
(d) * * *
(2) Social Security benefits if the institution has reason to
believe that those benefits were received and were not reported, or
that the applicant has incorrectly reported Social Security benefits
received by the applicant, the applicant's parents, or any other
children of the applicant's parents who are members of the applicant's
household, in the case of a dependent student, or by the applicant, the
applicant's spouse, or the applicant's children in the case of an
independent student. The applicant shall verify Social Security
benefits by submitting a document from the Social Security
Administration showing the amount of benefits received in the
appropriate calendar year for the appropriate individuals listed above
or, at the institution's option, a statement signed by both the
applicant and the applicant's parent, in the case of a dependent
student, or by the applicant, in the case of an independent student,
certifying that the amount listed on the applicant's aid application is
correct; and
* * * * *
8. Section 668.59 is amended by removing paragraphs (a)(2) and
redesignating paragraph (a)(3) as paragraph (a)(2), by revising
paragraph (a)(1) introductory text, by revising redesignated paragraph
(a)(2) introductory text, removing the word ``and'' at the end of
redesignated paragraph (a)(2)(i) and at the end of paragraph (c)(2)(i),
by revising redesignated paragraph (a)(2)(ii), by revising paragraphs
(b)(1) and (c)(2)(ii), and by revising paragraph (d) to read as
follows:
Sec. 668.59 Consequences of a change in application information.
(a) * * *
(1) Except as provided in paragraph (a)(2) of this section, if the
information on an application changes as a result of the verification
process, the institution shall require the applicant to resubmit his or
her application information to the Secretary for corrections if--
* * * * *
(2) An institution need not require an applicant to resubmit his or
her application information to the Secretary, recalculate an
applicant's EFC, or adjust an applicant's Federal Pell Grant award if,
as a result of the verification process, the institution finds--
* * * * *
(ii) No dollar amount in excess of $400 as calculated by the net
difference between the corrected sum of Adjusted Gross Income (AGI)
plus untaxed income minus U.S. taxes paid and the uncorrected sum of
Adjusted Gross Income (AGI) plus untaxed income minus U.S. taxes paid.
(b) * * *
(1) If an institution does not recalculate an applicant's EFC under
the provisions of paragraph (a)(2) of this section, the institution
shall calculate and disburse the applicant's Pell Grant award on the
basis of the applicant's original EFC.
(c) * * *
(2) * * *
(ii) No dollar amount in excess of $400 as calculated by the net
difference between the corrected sum of Adjusted Gross Income (AGI)
plus untaxed income minus U.S. taxes paid and the uncorrected sum of
Adjusted Gross Income (AGI) plus untaxed income minus U.S. taxes paid.
* * * * *
(d)(1) If the institution selects an applicant for verification for
an award year who previously received a loan under the William D. Ford
Federal Direct Loan Program for that award year, and as a result of
verification the loan amount is reduced, the institution shall comply
with the procedures for notifying the borrower and lender specified in
Sec. 668.61(a).
(2) If the institution selects an applicant for verification for an
award year who previously received a loan under the Federal Stafford
Loan Program for that award year, and as a result of verification the
loan amount is reduced, the institution shall comply with the
procedures for notifying the borrower and lender specified in
Sec. 668.61(b) and Sec. 682.604(h).
* * * * *
9. Section 668.60 is amended by revising paragraph (c)(2)
introductory text to read as follows:
Sec. 668.60 Deadlines for submitting documentation and the
consequences of failing to provide documentation.
* * * * *
(c) * * *
(2) If the applicant does not provide to the institution the
requested documentation and, if necessary, a verified SAR or the
institution does not receive a verified ISIR, within the additional
time period referenced in paragraph (c)(1) of this section, the
applicant--
* * * * *
Secs. 668.51, 668.55, 668.58, 668.59, 668.60, 668.61 [Amended]
10. In 34 CFR Part 668 add the words ``or William D. Ford Federal
Direct Loan'' after the words ``Federal Stafford Loan,'' in the
following places each time they appear:
a. Section 668.55(c)(2);
b. Section 668.58(a)(2)(iii)(A), (a)(2)(iii)(B) (twice), (c),
(d)(1) and (2);
c. Section 668.59(c) introductory text, (c)(1)(ii);
d. Section 668.60(b)(1)(i)(C), (b)(1)(i)(D), (b)(1)(ii); and
f. Section 668.61(b).
* * * * *
Secs. 668.51, 668.52, 668.55, 668.60, 668.61 [Amended]
11. In 668.51(a) remove the term ``Presidential Access Scholarship
and Partnership Program (PAS).''
12. In 34 CFR Part 668 remove the term ``PAS'' in the following
places:
a. Section 668.52 Institutional student information report and in
the definition for Student aid application; and
b. Section 668.55(c) introductory text, (c)(1), (c)(2); and
c. Section 668.60(b), (b)(1)(i)(A), (b)(1)(iii), (d); and
d. Section 668.61(a)(2)(ii)(B).
[FR Doc. 94-29118 Filed 11-28-94; 8:45 am]
BILLING CODE 4000-01-P
