99-19724. Student Assistance General Provisions; General Provisions for the Federal Perkins Loan Program, Federal Work-Study Program, and Federal Supplemental Educational Opportunity Grant Program; and Federal Pell Grant Program  

  • [Federal Register Volume 64, Number 148 (Tuesday, August 3, 1999)]
    [Proposed Rules]
    [Pages 42206-42219]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-19724]
    
    
    
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    _______________________________________________________________________
    
    Part III
    
    
    
    
    
    Department of Education
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    34 CFR Parts 668, 673, 674, 675, 676, and 690
    
    
    
    Student Assistance General Provisions; General Provisions for the 
    Federal Perkins Loan Program, Federal Work-Study Program, Federal 
    Supplemental Educational Opportunity Grant Program, and Federal Pell 
    Grant Program; Proposed Rule
    
    Federal Register / Vol. 64, No. 148 / Tuesday, August 3, 1999 / 
    Proposed Rules
    
    [[Page 42206]]
    
    
    
    DEPARTMENT OF EDUCATION
    
    34 CFR Parts 668, 673, 674, 675, 676, and 690
    
    RIN 1845-AA01
    
    
    Student Assistance General Provisions; General Provisions for the 
    Federal Perkins Loan Program, Federal Work-Study Program, and Federal 
    Supplemental Educational Opportunity Grant Program; and Federal Pell 
    Grant Program
    
    AGENCY: Department of Education.
    
    ACTION: Notice of proposed rulemaking.
    
    -----------------------------------------------------------------------
    
    SUMMARY: The proposed regulations would amend the regulations governing 
    the Student Assistance General Provisions, the Campus-Based programs 
    (Federal Perkins Loan, Federal Work-Study (FWS), and Federal 
    Supplemental Educational Opportunity Grant (FSEOG) programs), and the 
    Federal Pell Grant Program. These proposed amendments are a result of 
    recently enacted changes to the Higher Education Act of 1965, as 
    amended (HEA), made by the Higher Education Amendments of 1998 (1998 
    Amendments).
    
    DATES: We must receive your comments on or before September 15, 1999.
    
    ADDRESSES: Address all comments about these proposed regulations to: 
    Ms. Kathy Gause, U.S. Department of Education, P.O. Box 23272, 
    Washington, D.C. 20026-3272. If you prefer to send your comments 
    through the Internet use the following address: [email protected]
        If you want to comment on the information collection requirements 
    you must send your comments to the Office of Management and Budget at 
    the address listed in the Paperwork Reduction Act section of this 
    preamble. You may also send a copy of these comments to the Department 
    representative named in this section.
    
    FOR FURTHER INFORMATION CONTACT:
        1. For the Federal Perkins Loan, FWS, and FSEOG programs: Ms. Kathy 
    Gause, U.S. Department of Education, 400 Maryland Avenue, S.W., 
    Regional Office Building 3, Room 3045, Washington, DC 20202-5447. 
    Telephone: (202) 708-8242.
        2. For the Student Assistance General Provisions and the Federal 
    Pell Grant Program: Ms. Monica Woods, U.S. Department of Education, 400 
    Maryland Avenue, S.W., Regional Office Building 3, Room 3045, 
    Washington, DC 20202-5447. Telephone: (202) 708-8242.
        If you use a telecommunications device for the deaf (TDD), you may 
    call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
        Individuals with disabilities may obtain this document in an 
    alternate format (e.g., Braille, large print, audiotape, or computer 
    diskette) on request to the contact persons listed in the preceding 
    paragraphs.
    
    SUPPLEMENTARY INFORMATION:
    
    Invitation to Comment
    
        We invite you to submit comments regarding these proposed 
    regulations. To ensure that your comments have maximum effect in 
    developing the final regulations, we urge you to identify clearly the 
    specific section or sections of the proposed regulations that each of 
    your comments addresses and to arrange your comments in the same order 
    as the proposed regulations.
        We invite you to assist us in complying with the specific 
    requirements of Executive Order 12866 and its overall requirement of 
    reducing regulatory burden that might result from these proposed 
    regulations. Please let us know of any further opportunities we should 
    take to reduce potential costs or increase potential benefits while 
    preserving the effective and efficient administration of the programs.
        During and after the comment period, you may inspect all public 
    comments about these proposed regulations in Room 3053, ROB-3, 7th & D 
    Streets, SW, Washington, DC, between the hours of 8:30 a.m. and 4 p.m., 
    Eastern time, Monday through Friday of each week except Federal 
    holidays.
    
    Assistance to Individuals With Disabilities in Reviewing the 
    Rulemaking Record
    
        On request, we will supply an appropriate aid, such as a reader or 
    print magnifier, to an individual with a disability who needs 
    assistance to review the comments or other documents in the public 
    rulemaking record for these proposed regulations. If you want to 
    schedule an appointment for this type of aid you may call (202) 205-
    8113 or (202) 260-9895. If you use a TDD, you may call the Federal 
    Information Relay Service at 1-800-877-8339.
    
    Negotiated Rulemaking Process
    
        Section 492 of the HEA requires that, before publishing any 
    proposed regulations to implement programs under Title IV of the Act, 
    the Secretary obtain public involvement in the development of the 
    proposed regulations. After obtaining advice and recommendations, the 
    Secretary must conduct a negotiated rulemaking process to develop the 
    proposed regulations. All published proposed regulations must conform 
    to agreements resulting from the negotiated rulemaking process unless 
    the Secretary reopens the negotiated rulemaking process or provides a 
    written explanation to the participants in that process why the 
    Secretary has decided to depart from the agreements.
        To obtain public involvement in the development of the proposed 
    regulations, we published a notice in the Federal Register (63 FR 
    59922, November 6, 1998) requesting advice and recommendations from 
    interested parties concerning what regulations were necessary to 
    implement Title IV of the HEA. We also invited advice and 
    recommendations concerning which regulated issues should be subjected 
    to a negotiated rulemaking process. We further requested advice and 
    recommendations concerning ways to prioritize the numerous issues in 
    Title IV, in order to meet statutory deadlines. Additionally, we 
    requested advice and recommendations concerning how to conduct the 
    negotiated rulemaking process, given the time available and the number 
    of regulations that needed to be developed.
        In addition to soliciting written comments, we held three public 
    hearings and several informal meetings to give interested parties an 
    opportunity to share advice and recommendations with the Department. 
    The hearings were held in Washington, DC, Chicago, and Los Angeles, and 
    we posted transcripts of those hearings to the Department's Information 
    for Financial Aid Professionals' website (http://ifap.ed.gov).
        We then published a second notice in the Federal Register (63 FR 
    71206, December 23, 1998) to announce the Department's intention to 
    establish four negotiated rulemaking committees to draft proposed 
    regulations implementing Title IV of the HEA. The notice announced the 
    organizations or groups believed to represent the interests that should 
    participate in the negotiated rulemaking process and announced that the 
    Department would select participants for the process from nominees of 
    those organizations or groups. We requested nominations for additional 
    participants from anyone who believed that the organizations or groups 
    listed did not adequately represent the list of interests outlined in 
    section 492. Once the four committees were established they met to 
    develop proposed regulations over the course of several months, 
    beginning in January.
        The proposed regulations contained in this notice of proposed 
    rulemaking (NPRM) reflect the final consensus of Committee III, which 
    was made up of the following members:
    
    
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    Accrediting Commission of Career Schools and Colleges of Technology
    American Association of Collegiate Registrars and Admissions Officers
    American Association of Community Colleges
    American Association of Cosmetology Schools
    American Association of State Colleges and Universities
    American Council on Education
    Association of American Universities
    Career College Association
    Coalition of Higher Education Assistance Organizations
    Education Finance Council
    Legal Services Counsel (a coalition)
    National Association of College and University Business Officers
    National Association of Equal Opportunity in Higher Education
    National Association of Graduate/Professional Students
    National Association of Independent Colleges and Universities
    National Association of State Student Grant and Aid Programs/National 
    Council of Higher Education Loan Programs (a coalition)
    National Association of State Universities and Land-Grant Colleges
    National Association of Student Financial Aid Administrators
    National Direct Student Loan Coalition
    The College Board
    The College Fund/United Negro College Fund
    United States Department of Education
    United States Student Association
    US Public Interest Research Group
    
        As stated in the Committee protocols, consensus means that there 
    must be no dissent by any member in order for the committee to be 
    considered to have reached agreement. Consensus was reached on all of 
    the proposed regulations in this document.
    
    Affected Programs
    
        The student financial assistance programs under Title IV of the 
    Higher Education Act of 1965, as amended (HEA), affected by these 
    proposed regulations are the Federal Perkins Loan, FWS, FSEOG, and the 
    Federal Pell Grant programs. These proposed regulations also affect the 
    Student Assistance General Provisions regulations.
        The term ``campus-based programs'' refers to the Federal Perkins 
    Loan, FWS, and FSEOG programs. A description of the major proposed 
    changes to these program regulations follows. The proposed changes that 
    pertain to more than one program are described first, followed by 
    descriptions of provisions that pertain to only a specific program. We 
    will begin with a discussion of the proposed changes to the Student 
    Assistance General Provisions regulations followed by the ``campus-
    based programs'' discussion, and end with proposed changes to the 
    Federal Pell Grant Program.
    
    Summary of Proposed Regulatory Changes
    
    Student Assistance General Provisions
    
    Section 668.8 Eligible Program and Section 668.32 Student Eligibility--
    General
    
        Section 401(c) of the HEA was amended by the 1998 Amendments to 
    allow students enrolled in a postbaccalaureate teacher certificate or 
    licensing program to receive a Federal Pell Grant. For purposes of the 
    Federal Pell Grant Program, the current Student Assistance General 
    Provisions regulations require an educational program to be an 
    undergraduate program in order to qualify as an eligible program. The 
    current regulations also require that a student not have a 
    baccalaureate degree or first professional degree in order to receive a 
    Federal Pell Grant. These proposed regulations would amend the eligible 
    program provision in Sec. 668.8 and the student eligibility provision 
    in Sec. 668.32 of the Student Assistance General Provisions to conform 
    with the amended HEA.
    
    Section 668.161  Scope and Purpose.
    
        Amended section 445(c) of the HEA allows an institution, upon the 
    written request of a student, to make payments of FWS funds directly to 
    the student's account at a financial institution or account at the 
    institution for tuition and fees, contracted room and board, and other 
    institutionally provided educational related goods and services. 
    Currently Secs. 668.164 and 668.165 of the Subpart K--Cash Management 
    regulations establish the rules and procedures under which a 
    participating institution disburses Title IV, HEA program funds. 
    However, Subpart K does not specifically address the crediting of FWS 
    earnings to a student's account at the institution. Section 675.16 of 
    the FWS regulations would be amended to establish the disbursement 
    procedures for paying a student his or her wages. Therefore, these 
    proposed regulations would amend Sec. 668.161 to indicate that an 
    institution must follow Sec. 675.16 for paying a student under the FWS 
    Program instead of Secs. 668.164 and 668.165.
    
    Federal Perkins Loan, Federal Work-Study, and Federal Supplemental 
    Educational Opportunity Grant Programs
    
    Section 673.5  Overaward
    
        These proposed regulations would modify the overaward provisions in 
    Sec. 673.5 of the regulations for the campus-based programs. Section 
    428(a)(2)(C) of the HEA was amended to change the definition of 
    estimated financial assistance to exclude veterans education benefits 
    under Title 38, Chapter 30 (Montgomery GI Bill) and national service 
    education awards or post-service benefits under Title I of the National 
    and Community Service Act of 1990 (AmeriCorps) in determining a 
    student's eligibility for subsidized loans. This applies to a 
    subsidized Federal Stafford Loan (subsidized Stafford Loan) under the 
    Federal Family Education Loan (FFEL) Program and a Federal Direct 
    Stafford/Ford Loan (Direct Subsidized Loan) under the William D. Ford 
    Federal Direct Loan (Direct Loan) Program.
        Under current campus-based regulations, if a student has both a 
    subsidized loan and campus-based aid the most stringent requirement 
    regarding resources becomes operative since the student's eligibility 
    for campus-based funds is reduced by the amount of subsidized loans and 
    any Montgomery GI Bill benefits and AmeriCorps funds, or both, paid for 
    the cost of attendance. Thus, students receiving subsidized loans 
    because of the new exclusion of these benefits may have their 
    eligibility for campus-based aid reduced. The Committee concluded that, 
    under the new statute, a student should not lose campus-based 
    eligibility because of the interaction of the various Title IV 
    programs. Therefore, in order to allow students to have the full 
    advantage of this statutory exclusion of benefits without losing 
    campus-based eligibility, these proposed regulations would change the 
    definition of ``resources'' for the campus-based programs in cases 
    where a student receives both a subsidized loan and Montgomery GI Bill 
    veterans education benefits and/or an AmeriCorps education award. These 
    regulations are proposing that when packaging a student's financial aid 
    under the campus-based programs, an institution may exclude as a 
    resource any portion of a subsidized Stafford Loan or a Direct 
    Subsidized Loan that is equal to or less than the amount of the 
    student's Montgomery GI Bill veterans education benefits and AmeriCorps 
    education awards or post-service benefits paid for the cost of 
    attendance.
    
    Sections 674.10, 675.10, and 676.10  Selection of Students
    
        Current regulations require institutions to offer to less-than-
    full-time and independent students at least five percent of its FWS 
    allotment, five percent of its FSEOG allotment, or five percent of the 
    dollar amount of the
    
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    loans made under the Federal Perkins Loan Program if the need of all 
    these students exceeds five percent of the total need of all students 
    at an institution. These proposed regulations would amend Secs. 674.10, 
    675.10, and 676.10 in accordance with amended sections 413C(d), 
    443(b)(3), and 464(b)(2) of the HEA, to provide that if an 
    institution's FWS, FSEOG, or Federal Perkins Loan (respectively) 
    allocation is directly or indirectly based in part on the financial 
    need of less-than-full-time or independent students, then the 
    institution must offer to those students a reasonable portion of the 
    FWS allocation, FSEOG allocation, or dollar amount of Federal Perkins 
    Loans made.
        The language in the sections of the HEA referred to above require 
    institutions to ``make available'' campus-based funds to less-than-
    full-time and independent students. The Committee realized that in some 
    circumstances it may be difficult for an institution actually to 
    disburse funds to these students because institutions have no control 
    over whether students will accept aid. Therefore, to accommodate these 
    circumstances and prevent a burden on institutions, the Committee 
    agreed that the words ``make available'' should be interpreted to mean 
    that the institution must ``offer'' the funds to less-than-full-time 
    and independent students.
        These proposed regulations contain no definition of the statutory 
    words ``reasonable portion''. Institutions are expected to have 
    reasonable packaging policies for awarding campus-based funds. A policy 
    of exclusion for less-than-full-time and independent students would not 
    be acceptable for purposes of this requirement.
    
    Federal Work-Study Programs
    
    Section 675.2  Definitions
    
        In an effort to increase participation of FWS students in community 
    service activities, the definition of ``community services,'' in 
    section 441(c) of the HEA has been amended. The definition of 
    ``community services'' now includes child care services provided on 
    campus that are ``open and accessible to the community'' and services 
    to students with disabilities who ``are enrolled at the institution.'' 
    These proposed regulations would amend Sec. 675.2 of the FWS 
    regulations to reflect these statutory changes.
        Child care services. The statutory changes do not alter the 
    Secretary's current policy on the inclusion of child care services 
    provided on campus as ``community service''.
        This policy is described in Part 3 of The 1999-2000 Student 
    Financial Aid Handbook and in ``Dear Colleague'' letters CB-94-4, dated 
    March 1994, and CB-97-12, dated July 1997. On-campus jobs can meet the 
    definition of community service jobs if the services provided are open 
    and accessible to the community. A university or college in and of 
    itself is not considered the community for this purpose.
        A service (i.e., child care) is considered open to the community if 
    the service is publicized to the community and the general public uses 
    the service. These regulations are not proposing to set a numerical 
    count or percentage requirement for institutions to demonstrate public 
    use of the service. However, if the service is provided only to 
    students, faculty, staff, and their families, an FWS job does not meet 
    the definition of ``community service'' under the FWS Program.
        Services for students with disabilities. The 1998 Amendments also 
    amended the definition of ``community services'' to include the 
    provision of support services for students with disabilities who are 
    enrolled at the institution. Current regulations provide that on-campus 
    jobs providing support services for students with disabilities could 
    meet the definition of ``community services'' only if those services 
    were provided to the community as well. Under section 441(c)(3) of the 
    amended HEA, services to students with disabilities are to be 
    considered as community service activities, even if the services are 
    provided exclusively to students with disabilities who are enrolled at 
    the institution. This is the only statutory exception to the 
    requirement that community services must be open and accessible to the 
    community.
    
    Section 675.8  Program Participation Agreement
    
        These proposed regulations would amend the provisions governing the 
    program participation agreement between the Secretary and the 
    institution in Sec. 675.8 in accordance with the statutory change in 
    section 443(b)(6) of the HEA. The statutory change eliminates the 
    requirement that institutions employing FWS students must make 
    ``equivalent employment'' offered or arranged by the institution 
    reasonably available to all students at the institution who desire to 
    work.
    
    Section 675.16  Payments Directly to the Student's Account
    
        These proposed regulations would amend Sec. 675.16, in accordance 
    with amended section 445(c) of the HEA, to allow an institution, upon 
    the written request of a student, to make payments of FWS funds 
    directly to the student's account at a financial institution or the 
    student's account at the educational institution for tuition and fees, 
    contracted room and board, and other institutionally-provided 
    educationally-related goods and services.
        Currently, the FWS regulations prohibit an institution from 
    directly transferring the Federal share of FWS earnings to a student's 
    account at the institution. Since the FWS Program regulations allow for 
    payment to the student by check or similar instrument, the Department 
    in the past eased the administrative burden for institutions by 
    allowing for the electronic transfer of FWS compensation to the 
    student's bank account. This procedure was acceptable if the student 
    signed an authorization for the electronic transfer and the institution 
    maintained that authorization on file. The institution could not 
    require a student to use this method as a condition for receiving FWS 
    funds.
        The 1998 Amendments broaden the institution's authority concerning 
    students who want their FWS earnings credited to their accounts at the 
    institution to cover institutional charges. Institutions already had 
    this authority for all other Title IV, HEA program funds under 
    Secs. 668.164 and 668.165 of the Subpart K--Cash Management 
    regulations.
        Under Sec. 668.165 of the current regulations an institution is 
    required to provide specific award information to a student before it 
    starts disbursing Title IV, HEA funds for any award year. However, 
    under the proposed regulations Sec. 668.165 will not apply to the FWS 
    Program. Therefore, to have this requirement continue to apply to the 
    FWS Program, these regulations are proposing that this student 
    notification requirement be added to the FWS regulations in 
    Sec. 675.16. These regulations also propose that an institution, before 
    making an initial disbursement of FWS compensation for an ``award 
    period'' to a student, must notify the student of the amount of FWS 
    compensation he or she is authorized to earn, and how and when the 
    compensation will be paid.
        An ``award period'' is the period of time covered by the FWS award 
    made to a specific student. For example, if an institution makes an FWS 
    award to a student for only the summer, the ``award period'' is that 
    period of time. In this example, the period of time crosses over two 
    award years and the portion of compensation earned up to June 30 is 
    reported for one award year and the compensation earned after that
    
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    date is reported for the next award year. It is not the intention of 
    the proposed regulations to require that an institution inform the 
    student about the summer award again even though a new award year has 
    started. Because of this factor, the proposed FWS regulations for the 
    student notification refer to an ``award period'' and not an award 
    year.
        FWS Program student rights and responsibilities. The FWS Program's 
    purpose is to provide part-time employment to needy undergraduate and 
    graduate students. The important distinction to be made between FWS 
    Program funds and other Title IV program funds is that under the FWS 
    Program, the students hold jobs and their compensation is earned and 
    governed by the same applicable Federal, State, or local laws as any 
    other type of earnings from employment. These proposed regulations 
    would allow institutions to credit FWS earnings to a student's account 
    at the institution or to initiate an EFT to a bank account designated 
    by the student under the following conditions:
         The institution must obtain a written authorization from 
    the student;
         The authorization to transfer funds to a student's account 
    at the institution must be separate from the authorization to have 
    funds transferred to his or her bank account;
         For purposes of the authorization to transfer FWS funds to 
    a student's bank account, the bank forms required to initiate a direct 
    EFT deposit can be considered the authorization;
         The authorization cannot be included as part of a list or 
    in combination with other types of authorizations signed by the 
    student;
         The student may not be required or coerced to provide the 
    authorization;
         The student must be allowed to cancel or modify the 
    authorization at any time;
         The institution must clearly explain how it will use the 
    authorization; and
         If an institution credits a student's account and the 
    total amount of FWS funds credited exceeds the amount of tuition and 
    fees, contracted room and board, and charges for other institutionally-
    provided educationally-related goods and services, the student must be 
    paid the balance as soon as possible by the institution. However, a 
    credit balance must be paid no later than 14 days after the balance 
    occurred on the student's account.
        Holding excess FWS funds on behalf of students. These proposed 
    regulations would also allow an institution to hold, on behalf of a 
    student, FWS funds that would otherwise be paid directly to the student 
    after a balance occurred on the student's account unless specifically 
    prohibited by the Secretary under the terms of a reimbursement payment 
    method.
        To hold FWS funds for a student, an institution must:
         Obtain a written authorization from the student for this 
    specific purpose;
         Identify the amount of FWS funds held in excess for each 
    student in a designated subsidiary ledger account;
         Maintain cash in its bank account that is always at a 
    minimum equal to the FWS funds being held for students; and
         Pay any remaining balance by the end of the institution's 
    final FWS payroll period for an award period.
    
    Section 675.18  Use of Funds
    
        These regulations propose several amendments to Sec. 675.18.
        Carry back funds for summer employment. First, to provide 
    consistency with the new authority in the FSEOG Program to carry back 
    FSEOG funds, these regulations are proposing to change the date of May 
    15 in Sec. 675.18(f) to May 1. Currently, an institution is authorized 
    to make payments of FWS funds from the succeeding award year's 
    allocation to students for services performed on or after May 15 of the 
    previous award year but prior to the beginning of the succeeding award 
    year (that is, for summer employment). The HEA now provides this same 
    additional ``carry-back'' authority for the FSEOG Program. After 
    discussion of various possible dates, the Committee agreed that May 1 
    is a more realistic date. This is the only proposed change for the FWS 
    carry-forward/carry-back provision.
        Community service percentage requirement: Second, in accordance 
    with amended section 443(b)(2) of the HEA, these regulations are 
    proposing to amend Sec. 675.18(g) to provide that institutions are 
    required to use at least seven percent of the total funds granted to 
    the institution to compensate students employed in community service 
    activities for the 2000-2001 and subsequent award years. Currently, 
    institutions are required to use at least five percent of those funds 
    to compensate those students.
        New reading tutoring and family literacy project requirement. 
    Third, in accordance with amended section 443(b)(2) of the HEA, these 
    regulations also propose to amend Sec. 675.18(g) to require that, 
    beginning with the 2000-2001 award year, an institution must ensure 
    that one or more of its FWS students is employed (1) in a reading 
    tutoring project as a reading tutor for children who are preschool age 
    or are in elementary school, or (2) in a family literacy project 
    performing family literacy activities. As discussed in the preceding 
    paragraph, the HEA previously required that an institution use a 
    specified percentage of its annual FWS allocation to employ students in 
    community service jobs. Although the types of community service jobs 
    were not specified, employing students to tutor children in reading or 
    to work in a family literacy program was recommended to institutions 
    because of the national critical needs in these areas. Encouragement is 
    provided to institutions to employ students in these areas in 
    Sec. 675.26 of the FWS regulations through waivers of the FWS 
    institutional-share requirement.
        Family literacy projects. As defined in ``Dear Colleague'' letter 
    CB-98-6, dated May 1998, a family literacy project integrates four 
    components. It provides:
         Literacy or pre-literacy education to children;
         Literacy training for parents or other caregivers of 
    children in the program;
         A means of equipping parents or other caregivers with the 
    skills needed to partner with their children in learning; and
         Literacy activities between parents or other caregivers 
    and their children.
        This definition is consistent with the Even Start and Head Start 
    definitions of family literacy programs. The four parts make up a 
    comprehensive family literacy project. The interaction between parent 
    (or caregiver) and child is very important. The family literacy concept 
    recognizes the family as an institution for education and learning and 
    the role of parents as their children's first teachers. The family 
    literacy concept also is based on the premise that an investment in the 
    education of adults in a family is, simultaneously, an investment in 
    improving the chances for academic success for the children in that 
    family. For more information about family literacy projects, you can 
    review ``Dear Colleague'' letter CB-98-6 on the Information for 
    Financial Aid Professionals (IFAP) web site at: http://IFAP.ed.gov
        Waiver--Employment of students as reading tutors or in a family 
    literacy project: Section 443(b)(2) of the HEA provides for a waiver of 
    the community service requirement if the Secretary determines that 
    enforcing the requirement would cause hardship for students at the 
    institution. Institutions seeking a waiver of the community service 
    requirement are required to follow the Department's procedure. This 
    procedure requires institutions to submit a written waiver request and 
    any supporting information or documents by
    
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    a date established by the Secretary and published in the Federal 
    Register each year.
        The 1998 Amendments revised section 443(b)(2) of the HEA to grant 
    the Secretary the same waiver authority with respect to the new 
    statutory requirement that institutions must ensure that one or more of 
    its FWS students is employed in a reading tutoring project as a reading 
    tutor for children or in a family literacy project performing family 
    literacy activities. Therefore, these proposed regulations would 
    provide for a waiver if the Secretary determines that enforcing this 
    requirement would create a hardship for students at the institution. 
    The Department would use a waiver procedure that requires institutions 
    seeking a waiver of this new requirement to apply for this waiver in 
    the same manner as for the community service requirement waiver. The 
    institution would be required to submit a written waiver request and 
    any supporting information or documents by the date established by the 
    Secretary and published in the Federal Register each year.
        The Secretary has approved some waivers to institutions of the 
    community service requirement. In the waiver requests that received 
    approval, the institutions stated that their FWS allocation was very 
    small. It was noted that five percent (increase to seven percent 
    beginning with the 2000-2001 award year) of the FWS allocation only 
    provided enough funds for a student to work for a short period; 
    therefore, the schools were unable to find short-term placement for 
    community service. This was considered a hardship to the student. The 
    fact that it may be difficult for the institution to comply with this 
    provision is not in and of itself a basis for granting a waiver.
        Reading tutoring requirement--Priority for schools. Fourth, if an 
    institution employs FWS students as reading tutors in elementary 
    schools, section 443(d)(2) of the HEA requires the institution, to the 
    extent practicable, to give priority to employing students in schools 
    that are participating in a reading reform project. The 1998 Amendments 
    require that the reading reform project be one that is designed to 
    train teachers how to teach reading on the basis of scientifically-
    based research on reading and funded under the Elementary and Secondary 
    Education Act of 1965, as amended (ESEA). Under the new tutoring and 
    literacy activities, the amended HEA also requires that the FWS 
    students tutoring reading in a school participating in a reading reform 
    project described above receive training from the employing school in 
    the instructional practices used by the school. The Secretary 
    recommends that institutions contact their local educational agency to 
    find out if any elementary schools in their area participate in a 
    reading reform project funded under the ESEA.
        This new provision supports the President's ``America Reads 
    Challenge'' which is designed to ensure that all children read 
    independently and well by the end of the third grade, and also targets 
    at-risk children.
        Reading reform projects. The Reading Excellence Act amended Title 
    II of the ESEA by adding a component to improve students' reading 
    ability. The Reading Excellence Act recognizes a reading reform project 
    to be a project that supports the improvement of reading instruction. 
    The projects are funded by the Department of Education through 
    competitive grants to State educational agencies. The Secretary 
    believes that most educational policy makers and practitioners have 
    come to agree that school reform can result in increased student 
    achievement only to the extent that the following four principles are 
    implemented: (1) Set high academic standards that all students are 
    expected to achieve; (2) Measure student progress; (3) Ensure that 
    there is a well-qualified teacher in every classroom; and (4) Hold 
    schools accountable for results.
        Payment for time spent in training and travel. Fifth, in accordance 
    with amended section 443(b)(2)(A) of the HEA, these proposed 
    regulations would amend Sec. 675.18 to provide that an institution may 
    pay FWS students for a reasonable amount of time spent for training for 
    any FWS employment, and for travel that is directly related to 
    employment in community service activities (including tutoring in 
    reading and family literacy activities).
        Since every job consists of some type of training, whether formal 
    or informal, it has been the Department's policy to allow FWS students 
    to be paid wages during a training period conducted for a reasonable 
    length of time. This policy has applied whether the student was 
    employed in community service activities or not. Therefore, this 
    provision of the proposed regulations is not a change to previous 
    Department policy. The Secretary recognizes that jobs such as math or 
    reading tutors may require more training than other FWS positions. A 
    training period of an academic term would not be considered reasonable 
    because the goal of the FWS Program is to optimize the number of hours 
    an FWS student spends working. The Secretary would consider a 
    reasonable training period to be one that occurs before the student 
    begins the duties of tutoring and that does not exceed approximately 20 
    hours. Students may also be compensated for a reasonable amount of time 
    to perform on-going activities (i.e., preparation and evaluation time) 
    necessary to accomplish their tutoring jobs.
        The new provision in section 443(b)(2)(A) for compensating FWS 
    students for time spent traveling to and from their community service 
    job does change current policy. Beginning with the 1999-2000 award 
    year, institutions will be allowed to pay students for a reasonable 
    amount of time spent for travel that is directly related to employment 
    in community service activities. The Department's policy would require 
    that the time spent for travel be reported on the student's FWS time 
    record as the hours worked are currently reported. The Secretary 
    recommends that institutions use a time record that shows a separation 
    for the time spent in travel from hours worked.
    
    Section 675.20  Eligible Employers and General Conditions and 
    Limitation on Employment
    
        In accordance with amended section 443(b)(1) of the HEA, the 
    proposed regulations amend Sec. 675.20 to clarify that FWS employment 
    may include internships, practicums, or assistantships (e.g., research 
    or teaching assistantships). The 1998 Amendments do not alter the 
    Secretary's current policy on an FWS student receiving academic credit 
    from the work performed in an FWS job. This policy as discussed below 
    is described in Part 3 of The 1999-2000 Student Financial Aid Handbook. 
    
        It has been the Department's longstanding policy that a student 
    could receive academic credit from the work performed under the FWS 
    Program. However, certain restrictions apply to this type of 
    employment. An internship, practicum, or assistantship does not qualify 
    for FWS employment unless the employer would normally pay the student 
    for the same work even if that student were not FWS eligible. If the 
    employer normally pays or has paid such persons, the internship, 
    practicum, or assistantship qualifies as an FWS job. An example of an 
    internship that normally does not qualify as an FWS job is student 
    teaching because student teachers are not usually compensated for that 
    activity. Also, current Department policy is that a student who 
    receives academic credit for an FWS job cannot be paid any less than he 
    or she would be paid if no academic credit were received.
    
    [[Page 42211]]
    
        The 1998 Amendments allow a student to earn FWS funds while earning 
    academic credit in the jobs listed in the prior paragraph because these 
    types of jobs are considered to be outside the normal realm of 
    classroom experience. The list of jobs in these proposed regulations is 
    not meant to be exhaustive. However, Department policy does not allow a 
    student to be paid for receiving instruction in a classroom, 
    laboratory, or other academic setting. Institutions must continue to 
    ensure that students are not being paid for attending class.
        Department policy allows an FWS student to be assigned to assist an 
    instructor at any private nonprofit or public institution if the 
    student is doing work the institution would normally support under its 
    own employment program. For example, having a student serve as a 
    research assistant to a professor is appropriate, so long as the work 
    is in line with the professor's official duties and is considered work 
    for the institution itself. However, at a proprietary institution a 
    student may not assist an instructor because instructional activities 
    are not considered student services under Sec. 675.2(b) of the current 
    regulations.
    
    Section 675.23  Employment Provided by a Private For-Profit 
    Organization
    
        Current regulations provide that if a student is employed by a 
    private for-profit organization the work that the student performs must 
    be academically relevant to the student's educational program. In 
    accordance with amended section 443(c)(4) of the HEA, these proposed 
    regulations would amend Sec. 675.23(b) to provide that jobs in a 
    private for-profit organization must be academically relevant only to 
    the maximum extent possible. This change would allow some students to 
    pursue other employment opportunities that provide other valuable 
    experiences outside their field of study.
    
    Section 675.26  FWS Federal Share Limitations
    
        Current regulations provide that the Federal share of FWS 
    compensation paid to a student employed other than by a for-profit 
    organization may not exceed 75 percent. In accordance with amended 
    section 443(b)(5) of the HEA, these regulations propose to amend 
    Sec. 675.26 to provide that the Federal share of an FWS student's 
    compensation may exceed 75 percent, but may not exceed 90 percent, if 
    the student is employed at a nonprofit or a public organization that 
    cannot afford to pay the regular non-Federal share. Institutions that 
    choose to use this provision would have to meet several requirements as 
    prescribed in amended section 443(b)(5) of the HEA:
         No placement at the institution itself would be eligible 
    for the 90 percent match, nor at any agency owned, operated or 
    controlled by the institution. It is the Secretary's view and the 
    Committee agreed that a statement in the institution's file, signed by 
    both the organization and the institution, stating that they have no 
    relationship would satisfy this requirement.
         The organization would have to be selected by the 
    institution on an individual case-by-case basis. It is the Secretary's 
    view and the Committee agreed that an institution would satisfy this 
    requirement by selecting the nonprofit or public organization that 
    meets the requirements of this provision through its normal process of 
    selecting potential employers.
         The nonprofit or public organization must be otherwise 
    unable to afford the costs of this employment. In the Secretary's view 
    and the Committee agreed, a signed letter in the institution's file 
    from an official of the organization stating that the organization 
    cannot afford to pay the regular non-Federal share would be sufficient 
    evidence of the organization's inability to pay.
         This 90 percent funding level would be limited to no more 
    than 10 percent of the students paid under the FWS program. For 
    purposes of this calculation, the 1998 Amendments provide that the 
    institution must use the total number of students paid under the FWS 
    Program during the current award year.
        It is important to note that this proposed 10 percent limit on the 
    number of students paid at the 90 percent funding level does not 
    include students whose FWS wages have been exempted from the full 
    institutional match due to current regulations in Sec. 675.26(d) that 
    establish waiver criteria. These proposed regulations would continue to 
    authorize a Federal share of 100 percent of the FWS funds awarded to 
    students by an institution for an award year if the following 
    provisions in the current regulations apply:
         The institution requests the increased Federal share on 
    the Fiscal Operations Report and Application to Participate for that 
    year and is designated as an eligible institution under the 
    Strengthening Institutions Program (34 CFR part 607), the Strengthening 
    Historically Black Colleges and Universities Program (34 CFR part 608), 
    or the Strengthening Historically Black Graduate Institutions Program 
    (34 CFR part 609);
         The student is employed as a reading tutor for preschool 
    age children or children who are in elementary school;
         The student is employed in a family literacy program that 
    provides services to families with preschool age children or children 
    who are in elementary school; or
         The student is employed as a mathematics tutor for 
    children who are in elementary school through the ninth grade.
    
    Work-Colleges Program (Subpart C)
    
    Section 675.45  Allowable Costs, Federal, Share, and Institutional 
    Share
    
        The Work-Colleges Program was created by the Higher Education 
    Amendments of 1992 to encourage comprehensive work-learning programs 
    and recognize the special nature of institutions that choose to make 
    work-learning a central part of their educational programs. These 
    proposed regulations would amend Sec. 675.45(a) of the current 
    regulations in accordance with amended section 448 of the HEA to 
    provide Work-Colleges with more flexibility in the use of their funds. 
    These proposed regulations would allow participants in the Work-
    Colleges Program to coordinate and carry out joint projects and 
    activities to promote work service learning.
        These proposed regulations would also allow Work-Colleges to use 
    funds available to them to conduct a comprehensive longitudinal study 
    of academic progress and academic and career outcomes, relative to 
    student self-sufficiency in financing their higher education, repayment 
    of student loans, continued community service, kind and quality of 
    service performed and career choice and community service selected 
    after graduation. The Secretary and the Committee expect that the 
    results of this study will provide valuable information about the work-
    learning experience.
    
    Federal Supplemental Educational Opportunity Grant Program
    
    Section 676.18  Use of Funds
    
        In accordance with amended section 413E of the HEA, these proposed 
    regulations would amend Sec. 676.18 to add a new authority for an 
    institution to carry up to ten percent of its current award year FSEOG 
    allocation forward to spend in the next award year and to carry back up 
    to ten percent of its current award year allocation to spend in the 
    prior award year. Current regulations provide institutions with this 
    flexibility under the FWS Program, but not under the FSEOG Program.
    
    [[Page 42212]]
    
        In accordance with amended section 413E, the proposed amendments 
    would also permit institutions to carry back any portion of its current 
    award year FSEOG allocation to make awards to students for payment 
    periods that begin on or after May 1 of the prior award year but end 
    prior to the start of the current award year (summer enrollment through 
    June 30). This carry-back authority would be in addition to the 
    authority to carry back ten percent of the succeeding year's allocation 
    for use at any time during the preceding award year.
    
    Authority to Carry Forward and Carry Back FSEOG Funds During the 1998-
    99 Award Year
    
        Under proposed Sec. 676.18, institutions would be allowed to use 
    the new authority provided by amended section 413E beginning with the 
    1998-99 award year. The Secretary has decided and the Committee agreed 
    that the new carry-forward/carry-back authority for the FSEOG Program 
    may be implemented using the same general concepts used for the FWS 
    Program. Under the proposed regulations, the official allocation letter 
    for a specific award period would be the institution's authority to 
    exercise this option. Any of the funds carried forward or back must be 
    reported on the institution's Fiscal Operations and Application to 
    Participate (FISAP). For example, if an institution carried forward 10 
    percent of its 1998-99 FSEOG allocation to spend in award year 1999-
    2000, the institution would be required to report this amount on the 
    FISAP to be submitted by October 1, 1999. Before an institution may 
    spend its current year's allocation, it must spend any funds carried 
    forward from the previous year.
    
        Note: Due to the timing of the effective date of the law, an 
    institution is not able to carry back 1998-1999 FSEOG funds to spend 
    in the 1997-98 award year or carry forward 1997-1998 FSEOG funds to 
    spend in the 1998-1999 award year.
    
        These proposed changes will give institutions the flexibility to 
    provide additional FSEOG funds to students at a time when traditionally 
    there were no FSEOG funds available, and also help prevent the need for 
    an institution to return unused FSEOG funds for a particular award 
    year.
    
    Federal Pell Grant Program
    
    Section 690.6  Duration of Student Eligibility--Undergraduate Course of 
    Study and Eligible Postbaccalaureate Program
    
        The current regulations restrict Federal Pell Grant eligibility to 
    students who have not earned a baccalaureate degree. The 1998 
    Amendments revised section 401(c) of the HEA to extend Federal Pell 
    Grant eligibility to students enrolled in a postbaccalaureate teacher 
    certificate or licensing program even if they have earned a bachelor's 
    degree.
        In order to teach in most States, students must complete teacher 
    preparation courses. Some institutions incorporate these courses into a 
    baccalaureate program, while others offer these courses upon completion 
    of a baccalaureate program. To complete the teacher preparation courses 
    after earning a baccalaureate degree requires a fifth year of 
    undergraduate study. This fifth year of undergraduate study is 
    comparable to a fourth year of undergraduate study for a baccalaureate 
    program that incorporates teacher preparation. The 1998 Amendments 
    modified the HEA to allow certain students with a baccalaureate degree 
    to receive a Federal Pell Grant while completing a teacher preparation 
    program. As a result of this statutory change, these proposed 
    regulations would amend the duration of the student eligibility 
    provision of the Federal Pell Grant Program regulations. In addition, 
    these proposed regulations would make corresponding changes to the 
    eligible program provision in Sec. 668.8(h) and the student eligibility 
    provision in Sec. 668.32(c) of the Student Assistance General 
    Provisions regulations.
    Conditions for Determining Eligibility
        The 1998 Amendments provide that on a case-by-case basis, students 
    enrolled in a postbaccalaureate teacher certificate or licensing 
    program may be eligible to receive a Federal Pell Grant. To address 
    this case-by-case determination, the Secretary and the Committee agreed 
    to establish a set of conditions to be applied to each student enrolled 
    in a postbaccalaureate teacher certificate or licensing program. Under 
    the proposed regulations, if a student meets these conditions, and is 
    otherwise eligible, he or she may receive a Federal Pell Grant. These 
    conditions are discussed below and proposed in Sec. 690.6(c).
        To be eligible for a Federal Pell Grant, the 1998 Amendments 
    require that an otherwise eligible student must be:
         Enrolled in a postbaccalaureate program that consists of 
    courses required by a State to receive a professional certification or 
    licensing credential necessary for employment as a teacher in an 
    elementary or secondary school in that State;
         Enrolled in a postbaccalaureate program that does not lead 
    to a graduate degree;
         Enrolled at a postsecondary institution that does not 
    offer a baccalaureate degree in education; and
         Enrolled as at least a half-time student.
        The 1998 Amendments do not address whether students seeking to 
    renew their current teacher certification or licensure, or obtain a 
    teacher certification or licensure in another subject matter, are 
    eligible to receive a Federal Pell Grant. The Committee reached 
    consensus regarding the scope of eligibility for a Federal Pell Grant 
    under this provision; namely, to provide Federal Pell Grant funds to 
    students seeking to obtain certification or licensure to begin teaching 
    within a State. Thus, the proposed regulations limit Federal Pell Grant 
    eligibility to only those students pursuing an initial teacher 
    certification or licensing credential within a State.
        The proposed regulations would also allow students enrolled in a 
    postbaccalaureate teacher certificate or licensing program to be 
    eligible to receive a Federal Pell Grant for the period of time 
    necessary to complete the program.
    Treatment of Students Enrolled in the Postbaccalaureate Program as 
    Undergraduate Students Enrolled in an Undergraduate Program.
        The 1998 Amendments do not address whether students enrolled in a 
    postbaccalaureate teacher certificate or licensing program are enrolled 
    in an undergraduate or graduate program. Historically, the Federal Pell 
    Grant Program has been preserved as a source of financial assistance 
    for undergraduate students enrolled in an undergraduate program. As 
    previously discussed, the postbaccalaureate teacher certificate or 
    licensing program is comparable to a baccalaureate program that 
    incorporates teacher preparation into the fourth year of undergraduate 
    study. For this reason, the Secretary and the Committee agreed that 
    institutions must treat students who receive a Federal Pell Grant under 
    this provision as undergraduate students enrolled in an undergraduate 
    program.
        Under these proposed regulations a student would be treated as an 
    undergraduate student enrolled in an undergraduate program. Therefore, 
    the student is not automatically independent for purposes of 
    calculating the expected family contribution. Whether the student is 
    dependent or independent, the student must maintain the same dependency 
    status for all Title IV, student financial aid programs. Furthermore, 
    the student is only eligible for fifth year undergraduate Perkins, 
    FFEL, and Direct loan amounts.
    
    [[Page 42213]]
    
    Requirement to be a Regular Student in Order to Receive a Federal Pell 
    Grant
        The 1998 Amendments do not change the requirement that a Federal 
    Pell Grant recipient must be a regular student. A regular student is a 
    person who is enrolled in an eligible program for the purpose of 
    obtaining a degree, certificate, or other recognized educational 
    credential offered by the institution. Therefore, the institution must 
    provide a student enrolled in a postbaccalaureate teacher certificate 
    or licensing program with a certificate or other recognized educational 
    credential. This is true even if the State provides the student with a 
    certificate upon completion of the postbaccalaureate program. For the 
    purpose of this provision only, it is the view of the Secretary and the 
    Committee agreed that an acceptable recognized educational credential 
    may be an official transcript that documents the student's enrollment 
    in or completion of a postbaccalaureate teacher certificate or 
    licensing program.
    Simultaneous Enrollment in Both the Postbaccalaureate Teacher 
    Certificate or Licensing Program and a Graduate or Professional Degree 
    Program
        Neither the 1998 Amendments nor the proposed regulations in 
    Sec. 690.6 address simultaneous enrollment in both the 
    postbaccalaureate program (as described here) and a graduate or 
    professional degree program.
        The Secretary and the Committee agreed to allow Pell Grant 
    eligibility to a student who is enrolled in a postbaccalaureate program 
    and a separate graduate or professional degree program. However, to be 
    consistent with the proposed changes in Sec. 690.6, the proposed 
    regulations would require an institution to consider the following when 
    determining a student's eligibility for a Federal Pell Grant:
         A student who is enrolled in a postbaccalaureate teacher 
    certificate or licensing program and receives a Federal Pell Grant is 
    treated as an undergraduate student enrolled in an undergraduate 
    program. Thus, the student must be treated as an undergraduate student 
    for the other Title IV programs; e.g., a student who receives a Federal 
    Pell Grant is only eligible for fifth year undergraduate loan amounts;
         A student is not eligible for a Federal Pell Grant if he 
    or she is solely enrolled in a graduate or professional degree program, 
    even if the program's courses are the same as those required for the 
    postbaccalaureate teacher certificate or licensing program;
         A student is not eligible for a Federal Pell Grant if his 
    or her enrollment status, based on the hours required for the 
    postbaccalaureate teacher certificate or licensing program, is less 
    than half-time; and
         Only those courses required for the postbaccalaureate 
    teacher certificate or licensing program can be considered when 
    determining the student's enrollment status.
    
    Section 690.7  Institutional Participation
    
        The 1998 Amendments provide that an institution is ineligible to 
    participate in the Federal Pell Grant Program upon losing its 
    eligibility to participate in the FFEL or Direct Loan programs because 
    of its default rate. This provision is effective after the Secretary's 
    final publication of the cohort default rates for fiscal year 1996. 
    (These rates were published on October 26, 1998). This new provision, 
    in section 401(j) of the HEA, applies to institutions participating in 
    the FFEL or Direct Loan program on or after October 7, 1998. As a 
    result of this statutory change, these regulations propose to amend 
    Sec. 690.7 to provide for this loss of eligibility to participate in 
    the Federal Pell Grant Program. Specific information on the loss of 
    eligibility is provided in proposed Sec. 668.17(b)(4) in a recently 
    published NPRM.
    
    Goals 2000: Educate America Act
    
        The Goals 2000: Educate America Act (Goals 2000) focuses the 
    Nation's education reform efforts on the eight National Education Goals 
    and provides a framework for meeting them. Goals 2000 promotes new 
    partnerships to strengthen schools and expands the Department's 
    capacities for helping communities to exchange ideas and obtain 
    information needed to achieve the goals.
        These proposed regulations would address the National Education 
    Goals that (1) all children will start school ready to learn and that 
    student achievement will be enhanced; (2) call for increasing the rate 
    at which students graduate from high school and pursue high quality 
    postsecondary education and for supporting life-long learning; (3) 
    every adult American will be literate and will possess the knowledge 
    and skills necessary to compete in a global economy and exercise the 
    rights and responsibilities of citizenship; and (4) the Nation's 
    teaching force will have access to programs for the continued 
    improvement of their professional skills and the opportunity to acquire 
    the knowledge and skills needed to instruct and prepare all American 
    students for the next century. The proposed regulations in 
    Sec. 675.18(g) would further the objectives of these Goals by requiring 
    FWS student participation in reading tutoring and in family literacy 
    projects where the family is recognized as an institution for education 
    and learning and the parent is recognized as their children's first 
    teachers. The objectives of the Goals would also be addressed by the 
    proposal to extend eligibility for Federal Pell Grants to those 
    students who are pursuing a teacher certification or licensing 
    credential through a State approved non-degree postbaccalaureate 
    program.
    
    Executive Order 12866:
    
    1. Potential Costs and Benefits
    
        Under Executive Order 12866, we have 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 we have 
    determined as necessary for administering these programs effectively 
    and efficiently.
        In assessing the potential costs and benefits of this regulatory 
    action--both quantitative and qualitative--we have determined that the 
    benefits would justify the costs.
        We have also determined that this regulatory action would not 
    unduly interfere with State, local, and tribal governments in the 
    exercise of their governmental functions.
        We note that, as these proposed regulations were subject to 
    negotiated rulemaking, the costs and benefits of the various 
    requirements were discussed thoroughly by negotiators. The consensus 
    reached on a particular requirement generally reflected agreement on 
    the best possible approach to that requirement in terms of cost and 
    benefit.
        To assist the Department in complying with the specific 
    requirements of Executive Order 12866, the Secretary invites comments 
    on whether there may be further opportunities to reduce any potential 
    costs or to increase any potential benefits resulting from these 
    proposed regulations without impeding the effective and efficient 
    administration of the Title IV, HEA programs.
    
    2. Clarity of the Regulations
    
        Executive Order 12866 and the President's Memorandum of June 1, 
    1998 on ``Plain Language in Government Writing'' require each agency to 
    write regulations that are easy to understand.
        We invite comments on how to make these proposed regulations easier 
    to understand, including answers to questions such as the following:
    
    [[Page 42214]]
    
          Are the requirements in the proposed regulations clearly 
    stated?
          Do the proposed regulations contain technical terms or 
    other wording that interferes with their clarity?
          Does the format of the proposed regulations (grouping and 
    order of sections, use of headings, paragraphing, etc.) aid or reduce 
    their clarity?
          Would the proposed regulations be easier to understand if 
    we divided them into more (but shorter) sections? (A ``section'' is 
    preceded by the symbol ``Sec. '' and a numbered heading; for example, 
    Sec. 668.8 Eligible Program.)
          Could the description of the proposed regulations in the 
    SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
    making the proposed regulations easier to understand? If so, how?
          What else could we do to make the proposed regulations 
    easier to understand?
        Send any comments that concern how the Department could make these 
    proposed regulations easier to understand to the person listed in the 
    ADDRESSES section of the preamble.
    
    Regulatory Flexibility Act Certification
    
        We certify that these proposed regulations would not have a 
    significant economic impact on a substantial number of small entities. 
    Entities affected by these regulations are institutions of higher 
    education that participate in the Title IV, HEA programs. The 
    institutions are defined as small entities, according to the U.S. Small 
    Business Administration, if they are: for-profit or nonprofit entities 
    with total revenue of $5,000,000 or less; or entities controlled by 
    governmental entities with populations of 50,000 or less. These 
    proposed regulations would not impose a significant economic impact on 
    a substantial number of small entities. The regulations would benefit 
    both small and large institutions by providing additional flexibility 
    in the administration of the Federal Pell Grant and Campus-Based 
    programs without requiring significant changes to current institutional 
    system operations. These proposed regulations would ease administrative 
    burden and augment student benefits by: expanding Federal Pell Grant 
    eligibility to allow students enrolled in a postbaccalaureate teacher 
    certification or licensing program to receive a Federal Pell Grant; 
    allowing an institution, upon request of a student, to make payments of 
    FWS funds directly to the student's account at the institution; 
    revising the definition of ``resources'' in the Campus-Based programs 
    to maximize student benefits and augment institutional flexibility in 
    aid packaging; and implementing new carry-forward and carry-back 
    authorities for the FSEOG Program.
        We invite comments from small institutions as to whether the 
    proposed changes would have a significant economic impact on them.
    
    Paperwork Reduction Act of 1995
    
        Proposed Secs. 673.5, 675.10, 675.16, and 675.20 contain 
    information collection requirements. Under the Paperwork Reduction Act 
    of 1995 (44 U.S.C. 3507(d)), the Department of Education has submitted 
    a copy of these sections to the Office of Management and Budget (OMB) 
    for its review. Collection of information: General Provisions for the 
    Federal Perkins Loan, FWS, and FSEOG Programs--Section 673.5--
    Overaward--The Department currently has this section approved under OMB 
    control number 1845-0535. We propose to change the definition of the 
    term ``resources'' for a student who receives campus-based aid, a 
    subsidized Stafford Loan or a Direct Subsidized Loan, and Montgomery GI 
    Bill veterans educational benefits and/or an AmeriCorps education award 
    paid for the cost of attendance. The institution would be able to 
    exclude as a resource any portion of the subsidized loans that is equal 
    to or less that the amount of the veterans education or AmeriCorps 
    benefits received. This provision does not change the information 
    collection contained in this section.
        Section 675.10--Selection of students for FWS employment--We 
    propose under Sec. 675.10(c) that if an institution's allocation of FWS 
    funds is based in part on the financial need of students attending the 
    institution as less-than-full-time or independent students, the 
    institution must offer a reasonable portion of the allocation for FWS 
    to those students. The requirement for offering 5 percent of the FWS 
    allocation would be eliminated. This requirement does not change the 
    information collection contained in this section regarding the 
    maintaining of an institution's procedures for selecting students for 
    FWS employment.
        Section 675.16--Payments to students--We are proposing under 
    Sec. 675.16(a)(2) that before an institution pays FWS compensation to a 
    student, the institution will be required to send the student a notice 
    informing the student of the amount of funds he or she is eligible to 
    earn, and how and when the FWS funds will be paid. To provide the 
    student with this notice is standard institutional practice. The 
    institutions that participate in the Title IV, HEA programs normally 
    send this notice out to all students that have applied to their school 
    for Title IV, HEA funds. Students generally receive one notice listing 
    all Title IV, HEA program funds they can expect to receive. FWS funds 
    are earned compensation. Therefore, we have concluded that the 
    requirement for the notice should be reiterated in Sec. 675.16. There 
    are 3,282 institutions of higher education currently participating in 
    the FWS Program, with 747,913 total FWS recipients. We understand that 
    the majority of these 747,913 FWS recipients receive some other type of 
    Title IV, HEA program funds and that institutions are already providing 
    FWS students this information along with information on other types of 
    aid the student can expect to receive in one notice.
        Subpart K of the Student Assistance General Provisions regulations 
    (34 CFR Part 668) under the OMB control number 1845-0697 governs the 
    cash management regulations as authorized by section 487 of the HEA. 
    Amendments to this section were part of a Division-wide package--Cash 
    Management/Easy Access for Students and Institutions (EASI)--intended 
    to clarify and consolidate current policies and requirements, and make 
    necessary changes in the regulatory framework for us to improve 
    significantly the delivery of Title IV, HEA program funds to students 
    and institutions. Burden hours for Sec. 668.165(a)(1) were calculated 
    and cleared under 1845-0697 to determine the cost to institutions for 
    notifying students once an award year of: the amounts of Title IV, HEA 
    program funds a student can expect to receive; how and when those funds 
    will be paid; and, whether any Title IV, HEA program loans are 
    subsidized or unsubsidized. There are 6,576 institutions sending this 
    notice to 6,223,450 Title IV aid recipients with an average of 946.4 
    responses per institution. With each institution taking approximately 
    five minutes to retrieve and mail the information the total average 
    hour burden for each institution is calculated as 78.9 hours. 
    Therefore, annual recordkeeping and reporting burden contained in this 
    collection total 518,846.4 (6,576 respondents  x  78.9 hours) hours. 
    Any further calculation of burden hours for Sec. 675.16 for providing a 
    student a notice of the amount of FWS program funds he or she can 
    expect to receive would duplicate hours already calculated for this 
    procedure in Sec. 668.165(a)(1) and cleared under OMB 1845-0697.
        Section 675.16 also includes a proposal that upon the written 
    request of a student, an institution may make payments of FWS funds 
    directly to the
    
    [[Page 42215]]
    
    student's account at the institution for tuition and fees, room and 
    board, and other institutional provided goods and services. This 
    practice is prohibited by current regulations, so it is difficult to 
    estimate an accurate number of respondents that would be submitting 
    this request. Some institutions have informed the Department that they 
    will not implement this procedure, but will continue to pay FWS 
    students by check or electronic fund transfer to the student's bank 
    account. Other institutions have expressed to the Department that the 
    use of this procedure will be minimal at their institutions.
        There are 3,282 institutions currently participating in the FWS 
    Program. A total of 747,913 students receive FWS funds at these 
    institutions. We estimate that 74,791 (10 percent of) respondents may 
    sign a written request to have their FWS earnings credited to their 
    account at an institution and that request will average 1 minute per 
    response. Total annual burden hours for the respondents are estimated 
    to be 1,247 hours. The annual recordkeeping burden hours for 3,282 
    institutions to obtain signatures and maintain a record of the request 
    in their recordkeeping system are estimated to be 12,472 hours. Annual 
    recordkeeping and reporting burden contained in this collection of 
    information as proposed in these regulations are estimated to be 13,719 
    hours. The total annual recordkeeping and reporting burden hours for 
    Sec. 675.16 equals 13,963 hours.
        Section 675.20--Eligible employers and general conditions and 
    limitation on employment--We propose under Sec. 675.20(d) to clarify 
    that employment under the FWS Program may include internships, 
    practicums, and research, teaching, or other assistantships as 
    determined by the Secretary. This proposed change does not affect the 
    information collection requirement in this section for a written 
    agreement between the institution and the employer that is initiated as 
    part of an institution's normal business practices.
        If you want to comment on the information collection requirements 
    please send your comments to the Office of Information and Regulatory 
    Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
    20503; Attention: Desk Officer for U.S. Department of Education. You 
    may also send a copy of these comments to the Department representative 
    named in the ADDRESSES section of this preamble.
        We consider your comments on these proposed collections of 
    information in--
         Deciding whether the proposed collections are necessary 
    for the proper performance of our functions, including whether the 
    information will have practical use;
         Evaluating the accuracy of our estimate of the burden of 
    the proposed collections, including the validity of our methodology and 
    assumptions;
         Enhancing the quality, usefulness, and clarity of the 
    information we collect; and
         Minimizing the burden on those who must respond. This 
    includes exploring the use of appropriate automated, electronic, 
    mechanical, or other technological collection techniques or other forms 
    of information technology; e.g., permitting electronic submission of 
    responses.
        OMB is required to make a decision concerning the collections of 
    information contained in these proposed regulations between 30 and 60 
    days after publication of this document in the Federal Register. 
    Therefore, to ensure that OMB gives your comments full consideration, 
    it is important that OMB receives the comments within 30 days of 
    publication. This does not affect the deadline for your comments to us 
    on the proposed regulations.
    
    Intergovernmental Review
    
        The Federal Supplemental Educational Opportunity Grant 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.
        The Federal Work-Study and Federal Pell Grant programs are not 
    subject to the requirements of Executive Order 12372 and the 
    regulations in 34 CFR part 79.
    
    Assessment of Educational Impact
    
        The Secretary particularly requests comments on whether the 
    proposed regulations would require transmission of information that any 
    other agency or authority of the United States gathers or makes 
    available.
    
    Electronic Access to This Document
    
        You may view this document, as published in the Federal Register, 
    in text or Adobe Portable Document Format (PDF) on the Internet at the 
    following sites:
    http://ocfo.ed.gov/fedreg.htm
    http://ifap.ed.gov/csb_html/fedlreg.htm
    http://www.ed.gov/legislation/HEA/rulemaking/
    
    To use the PDF you must have the Adobe Acrobat Reader Program with 
    Search, which is available free at the previous sites. If you have 
    questions about using the PDF, call the U.S. Government Printing Office 
    (GPO), toll free, at 1-888-293-6498; or in the Washington, D.C., area 
    at (202) 512-1530.
    
        Note: 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 on GPO Access at: http://
    www.access.gpo.gov/nara/index.html
    
    Catalog of Federal Domestic Assistance Numbers: 84.033 Federal Work-
    Study Program; 84.007 Federal Supplemental Educational Opportunity 
    Grant Program; and 84.063 Federal Pell Grant Program)
    
    List of Subjects
    
    34 CFR Parts 668, 673, 674 and 675
    
        Colleges and universities, Employment, Grant programs--education, 
    Reporting and recordkeeping requirements, Student aid.
    
    34 CFR Part 676
    
        Grant programs--education, Reporting and recordkeeping 
    requirements, Student aid.
    
    34 CFR Part 690
    
        Grant programs--education, Reporting and recordkeeping 
    requirements, Student aid.
    
        Dated: July 27, 1999.
    Richard W. Riley,
    Secretary of Education.
        For the reasons stated in the preamble, the Secretary proposes to 
    amend title 34 of the Code of Federal Regulations by amending Parts 
    668, 673, 674, 675, 676, and 690 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, 1099c, and 
    1141, unless otherwise noted.
    
        2. Section 668.8 is amended by revising paragraph (h) to read as 
    follows:
    
    
    Sec. 668.8  Eligible program.
    
    * * * * *
        (h) Eligibility for Federal Pell Grant and FSEOG programs. In 
    addition to satisfying other relevant provisions of this section--
    
    [[Page 42216]]
    
        (1) An educational program qualifies as an eligible program for 
    purposes of the Federal Pell Grant Program only if the educational 
    program is an undergraduate program or a postbaccalaureate teacher 
    certificate or licensing program as described in 34 CFR 690.6(c); and
        (2) An educational program qualifies as an eligible program for 
    purposes of the FSEOG Program only if the educational program is an 
    undergraduate program.
    * * * * *
        3. Section 668.32 is amended by revising paragraph (c) to read as 
    follows:
    
    
    Sec. 668.32  Student eligibility--general.
    
    * * * * *
        (c)(1) For purposes of the FSEOG Program, does not have a 
    baccalaureate or first professional degree;
        (2) For purposes of the Federal Pell Grant Program--
        (i) Does not have a baccalaureate or first professional degree; or
        (ii) Is enrolled in a postbaccalaureate teacher certificate or 
    licensing program as described in 34 CFR 690.6(c); and
        (iii) Is not incarcerated in a Federal or State penal institution; 
    and
        (3) For purposes of the Federal Perkins Loan, FFEL, and Direct Loan 
    programs, is not incarcerated;
    * * * * *
        4. Section 668.161 is amended by revising paragraph (a)(4) to read 
    as follows:
    
    
    Sec. 668.161  Scope and purpose.
    
        (a) * * *
        (4) FWS Program. An institution must follow the disbursement 
    procedures in 34 CFR 675.16 for paying a student his or her wages under 
    the FWS Program instead of the disbursement procedures in 34 CFR 
    668.164 and 668.165.
    * * * * *
    
    PART 673--GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM, 
    FEDERAL WORK-STUDY PROGRAM, AND FEDERAL SUPPLEMENTAL EDUCATIONAL 
    OPPORTUNITY GRANT PROGRAM
    
        5. The authority citation for part 673 continues to read as 
    follows:
    
        Authority: 20 U.S.C 421-429, 1070b-1070b-3, and 1087aa-1087ii; 
    42 U.S.C. 2751-2756b, unless otherwise noted.
    
        6. Section 673.5 is amended by revising paragraph (c)(1) 
    introductory text and paragraph (c)(1)(ix); by redesignating paragraphs 
    (c)(1)(x) and (c)(1)(xi) as paragraphs (c)(1)(xi) and (c)(1)(xii), 
    respectively; and by adding new paragraphs (c)(1)(x) and (c)(4) to read 
    as follows:
    
    
    Sec. 673.5  Overaward.
    
    * * * * *
        (c) Resources. (1) Except as provided in paragraphs (c)(2), (c)(3), 
    and (c)(4) of this section, the Secretary considers that ``resources'' 
    include, but are not limited to, any--
    * * * * *
        (ix) Veterans educational benefits paid under Chapters 30, 31, 32, 
    and 35 of title 38 of the United States Code;
        (x) National service education awards or post-service benefits paid 
    for the cost of attendance under title I of the National and Community 
    Service Act of 1990 (AmeriCorps);
    * * * * *
        (4) The institution may exclude as a resource any portion of a 
    Federal Direct Stafford/Ford Loan and subsidized Federal Stafford Loan 
    that is equal to or less than the amount of a student's veterans 
    education benefits paid under Chapter 30 of title 38 of the United 
    States Code (Montgomery GI Bill) and national service education awards 
    or post service benefits paid for the cost of attendance under title I 
    of the National and Community Service Act of 1990 (AmeriCorps).
    * * * * *
    
    PART 674--FEDERAL PERKINS LOAN PROGRAM
    
        7. The authority citation for part 674 continues to read as 
    follows:
    
        Authority: 20 U.S.C. 1087aa-1087ii and 20 U.S.C. 421-429, unless 
    otherwise noted.
    
        8. Section 674.10 is amended by revising paragraph (b) to read as 
    follows:
    
    
    Sec. 674.10  Selection of students for loans.
    
    * * * * *
        (b) If an institution's allocation of Federal Capital Contribution 
    is directly or indirectly based in part on the financial need 
    demonstrated by students attending the institution as less-than-full-
    time or independent students, a reasonable portion of the dollar amount 
    of loans made under this part must be offered to those students.
    * * * * *
    
    PART 675--FEDERAL WORK-STUDY PROGRAMS
    
        9. The authority citation for part 675 is revised to read as 
    follows:
    
        Authority: 42 U.S.C. 2751-2756b, unless otherwise noted.
    
        10. In Sec. 675.2 paragraph (b) is amended by revising paragraphs 
    (1) and (3) of the definition of ``community services'' to read as 
    follows:
    
    
    Sec. 675.2  Definitions.
    
    * * * * *
        (b) * * *
        (1) Such fields as health care, child care (including child care 
    services provided on campus that are open and accessible to the 
    community), literacy training, education (including tutorial services), 
    welfare, social services, transportation, housing and neighborhood 
    improvement, public safety, crime prevention and control, recreation, 
    rural development, and community improvement;
    * * * * *
        (3) Support services to students with disabilities, including 
    students with disabilities who are enrolled at the institution; and
    * * * * *
    
    
    Sec. 675.8  [Amended]
    
        11. Section 675.8 is amended by removing paragraph (d), and 
    redesignating paragraphs (e), (f), and (g) as paragraphs (d), (e), and 
    (f), respectively.
        12. Section 675.10 is amended by revising paragraph (c) to read as 
    follows:
    
    
    Sec. 675.10  Selection of students for FWS employment.
    
    * * * * *
        (c) Part-time and independent students. If an institution's 
    allocation of FWS funds is directly or indirectly based in part on the 
    financial need demonstrated by students attending the institution as 
    less-than-full-time or independent students, a reasonable portion of 
    the allocation must be offered to those students.
        13. Section 675.16 is amended to read as follows by:
        A. Redesignating paragraphs (a)(2), (a)(3), and (a)(4), as 
    paragraphs (a)(9), (a)(10), and (a)(11), respectively;
        B. Revising paragraph (a)(1) and adding new paragraphs (a)(2) 
    through (a)(8);
        C. In newly redesignated paragraph (a)(10) by removing ``wages 
    are'' and adding, in its place, ``compensation is'';
        D. In newly redesignated paragraph (a)(11) by removing ``wages'' 
    and adding, in its place, ``compensation'';
        E. Revising paragraph (b)(1); and
        F. In paragraphs (b)(2), (b)(3), and (c), removing ``shall'' and 
    adding, in its place, ``must''.
    
    
    Sec. 675.16  Payments to students.
    
        (a)(1) An institution must pay a student FWS compensation at least 
    once a month.
        (2) Before an institution makes an initial disbursement of FWS 
    compensation to a student for an award period, the institution must 
    notify the student of the amount of funds the student is authorized to 
    earn, and how
    
    [[Page 42217]]
    
    and when the FWS compensation will be paid.
        (3) An institution must pay FWS compensation to a student by--
        (i) Check or similar instrument that the student can cash on his or 
    her own endorsement;
        (ii) Initiating an electronic funds transfer (EFT) to a bank 
    account designated by the student after obtaining the authorization 
    described in paragraph (a)(4)(i) of this section;
        (iii) Crediting the student's account at the institution after 
    obtaining the authorization described in paragraph (a)(4)(i) of this 
    section. The institution may only credit the student's account at the 
    institution to satisfy current award year charges for--
        (A) Tuition and fees;
        (B) Board, if the student contracts with the institution for board;
        (C) Room, if the student contracts with the institution for room; 
    and
        (D) Other institutionally provided educationally related goods and 
    services; or
        (iv) Crediting the student's account at the institution to satisfy 
    minor prior award year authorized charges if these charges are less 
    than $100 or if the payment of these charges does not, and will not, 
    prevent the student from paying his or her current educational costs 
    after obtaining the authorization described in paragraph (a)(4)(i) of 
    this section.
        (4)(i) Except for the noncash contributions allowed under 
    paragraphs (b)(2) and (b)(3) of this section, an institution must 
    obtain a separate written authorization from the student if the student 
    is paid FWS compensation by--
        (A) Crediting the student's account at the institution; or
        (B) Initiating an EFT to a bank account designated by the student.
        (ii) If an institution obtains a written authorization from the 
    student, the institution may hold excess FWS funds under paragraph 
    (a)(8) of this section.
        (iii) The institution must obtain and use the written authorization 
    in accordance with the requirements of paragraphs (a)(5) and (a)(6) of 
    this section.
        (5) In obtaining the student's written authorization described in 
    paragraph (a)(4) of this section, an institution--
        (i) May not require or coerce the student to provide that 
    authorization;
        (ii) Must allow the student to cancel or modify that authorization 
    at any time; and
        (iii) Must clearly explain how it will carry out that activity.
        (6)(i) If a student modifies the written authorization described in 
    paragraph (a)(4) of this section, the modification takes effect on the 
    date the institution receives the modification notice.
        (ii) If a student cancels the written authorization described in 
    paragraph (a)(4)(i)(A) of this section, the institution may use the FWS 
    compensation to pay only those authorized charges incurred by the 
    student before the institution received the notice.
        (7) If an institution pays a student FWS compensation by crediting 
    the student's account, and the result is a credit balance, the 
    institution must pay the credit balance directly to the student as soon 
    as possible but no later than 14 days after the balance occurred on the 
    account.
        (8) Except if prohibited by the Secretary under the reimbursement 
    payment method, an institution may hold, on behalf of the student, FWS 
    funds that would otherwise be paid directly to the student under 
    paragraph (a)(7) of this section, if the institution obtains the 
    authorization described in paragraph (a)(4)(ii) of this section. If an 
    institution holds excess FWS funds, the institution must--
        (i) Identify the amount of FWS funds the institution holds for each 
    student in a subsidiary ledger account designated for that purpose;
        (ii) Maintain, at all times, cash in its bank account in an amount 
    at least equal to the amount of FWS funds the institution holds for the 
    student; and
        (iii) Pay any remaining balance by the end of the institution's 
    final FWS payroll period for an award period.
    * * * * *
        (b)(1) Except for the noncash contributions allowed under 
    paragraphs (b)(2) or (b)(3) of this section, an institution must pay 
    the student its share of his or her FWS compensation at the same time 
    it pays the Federal share.
    * * * * *
        14. Section 675.18 is amended as follows by:
        A. Revising paragraph (a)(2);
        B. In paragraph (f), removing, ``May 15'' and adding, in its place, 
    ``May 1'';
        C. Revising paragraphs (g)(1) and (g)(2); and adding new paragraphs 
    (g)(3) and (h).
    
    
    Sec. 675.18  Use of funds.
    
        (a) * * *
        (2) Paying administrative expenses as provided for in 34 CFR 673.7;
    * * * * *
        (g) Community service. (1) For the 2000-2001 award year and 
    subsequent award years, an institution must use at least seven percent 
    of the sum of its initial and supplemental FWS allocations for an award 
    year to compensate students employed in community service activities. 
    In meeting this community service requirement, an institution must 
    include at least one--
        (i) Reading tutoring project that employs one or more FWS students 
    as reading tutors for children who are preschool age or are in 
    elementary school; or
        (ii) Family literacy project that employs one or more FWS students 
    in family literacy activities.
        (2) The Secretary may waive the requirements in paragraph (g)(1) of 
    this section if the Secretary determines that an institution has 
    demonstrated that enforcing the requirements in paragraph (g)(1) of 
    this section would cause a hardship for students at the institution.
        (3) To the extent practicable, in providing reading tutors for 
    children under paragraph (g)(1)(i), an institution must--
        (i) Give priority to the employment of students to tutor in reading 
    in schools that are participating in a reading reform project that--
        (A) Is designed to train teachers how to teach reading on the basis 
    of scientifically-based research on reading; and
        (B) Is funded under the Elementary and Secondary Education Act of 
    1965; and
        (ii) Ensure that any student who is employed in a school 
    participating in a reading reform project described in paragraph 
    (g)(3)(i) of this section receives training from the employing school 
    in the instructional practices used by the school.
        (h)(1) Payment for time spent in training and travel. For any award 
    year, an institution may pay students for a reasonable amount of time 
    spent for training that is directly related to FWS employment.
        (2) Beginning with the 1999-2000 award year, an institution may pay 
    students for a reasonable amount of time spent for travel that is 
    directly related to employment in community service activities 
    (including tutoring in reading and family literacy activities).
        15. Section 675.20 is amended by adding a new paragraph (d) to read 
    as follows:
    
    
    Sec. 675.20  Eligible employers and general conditions and limitation 
    on employment.
    
    * * * * *
        (d) Academic credit and work-study. (1) A student may be employed 
    under the FWS program and also receive academic credit for the work 
    performed. Such jobs include, but are not limited to, work performed 
    when the student is--
    
    [[Page 42218]]
    
        (i) Enrolled in an internship;
        (ii) Enrolled in a practicum; or
        (iii) Employed in a research, teaching, or other assistantship.
        (2) A student employed in an FWS job and receiving academic credit 
    for that job may not be--
        (i) Paid less than he or she would be if no academic credit were 
    received;
        (ii) Paid for receiving instruction in a classroom, laboratory, or 
    other academic setting; and
        (iii) Paid unless the employer would normally pay the person for 
    the same position.
        16. Section 675.23 is amended by revising paragraph (b)(1) to read 
    as follows:
    
    
    Sec. 675.23  Employment provided by a private for-profit organization.
    
    * * * * *
        (b) * * *
        (1) The work that the student performs must be academically 
    relevant to the student's educational program, to the maximum extent 
    practicable; and
    * * * * *
        17. Section 675.26 is amended by revising paragraph (a)(1), by 
    redesignating paragraphs (a)(2) and (a)(3) as paragraphs (a)(3) and 
    (a)(4), by adding a new paragraph (a)(2), and by revising paragraph 
    (d)(2)(iii) to read as follows:
    
    
    Sec. 675.26  FWS Federal share limitations.
    
        (a)(1) The Federal share of FWS compensation paid to a student 
    employed other than by a private for-profit organization, as described 
    in Sec. 675.23, may not exceed 75 percent unless the Secretary approves 
    a higher share under paragraph (a)(2) or (d) of this section.
        (2) The Federal share of the compensation paid to a student may 
    exceed 75 percent, but may not exceed 90 percent, if--
        (i) The student is employed at a private nonprofit organization or 
    a Federal, State, or local public agency that--
        (A) Is not a part of, and is not owned, operated, or controlled by, 
    or under common ownership, operation, or control with, the institution;
        (B) Is selected by the institution on an individual case-by-case 
    basis;
        (C) Would otherwise be unable to afford the costs of this 
    employment; and
        (ii) The number of students compensated under paragraph (a)(2)(i) 
    of this section is not more than 10 percent of the total number of 
    students paid under the FWS Program at the institution.
    * * * * *
        (d) * * *
        (2) * * *
        (iii) The student is employed in a family literacy project that 
    provides services to families with preschool age children or children 
    who are in elementary school; or
    * * * * *
    
    Subpart C--Work-Colleges Program
    
        18. Section 675.45 is amended by adding new paragraphs (a)(5) and 
    (a)(6) to read as follows:
    
    
    Sec. 675.45  Allowable costs, Federal share, and institutional share.
    
        (a) * * *
        (5) Coordinate and carry out joint projects and activities to 
    promote work service learning.
        (6) Carry out a comprehensive, longitudinal study of student 
    academic progress and academic and career outcomes, relative to student 
    self-sufficiency in financing their higher education, repayment of 
    student loans, continued community service, kind and quality of service 
    performed, and career choice and community service selected after 
    graduation.
    * * * * *
    
    PART 676--SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM
    
        19. The authority citation for part 676 continues to read as 
    follows:
    
        Authority: 20 U.S.C. 1070b-1070b-3, unless otherwise noted.
    
        20. Section 676.10 is amended by revising paragraph (b) to read as 
    follows:
    
    
    Sec. 676.10  Selection of students for FSEOG awards.
    
    * * * * *
        (b) Part-time and independent students. If an institution's 
    allocation of FSEOG funds is directly or indirectly based in part on 
    the financial need demonstrated by students attending the institution 
    as less-than-full-time or independent students, a reasonable portion of 
    the allocation must be offered to those students.
        21. Section 676.18 is amended by revising paragraph (a)(2), and 
    adding new paragraphs (c), (d), (e) and (f) to read as follows:
    
    
    Sec. 676.18  Use of funds.
    
        (a) * * *
        (2) Paying administrative expenses as provided for in 34 CFR 673.7.
    * * * * *
        (c) Carry forward funds. (1) An institution may carry forward and 
    expend in the next award year up to 10 percent of the sum of its 
    initial and supplemental FSEOG allocations for the current award year.
        (2) Before an institution may spend its current year FSEOG 
    allocation, it must spend any funds carried forward from the previous 
    year.
        (d) Carry back funds. An institution may carry back and expend in 
    the previous award year up to 10 percent of the sum of its initial and 
    supplemental FSEOG allocations for the current award year. The 
    institution's official allocation letter represents the Secretary's 
    approval to carry back funds.
        (e) Use of funds carried forward and carried back. An institution 
    may use the funds carried forward or carried back under paragraphs (c) 
    and (d) of this section, respectively, for activities described in 
    paragraph (a) of this section.
        (f) Carry back funds for summer FSEOG awards. An institution may 
    carry back and expend in the previous award year any portion of its 
    initial and supplemental FSEOG allocations for the current award year 
    to make awards to eligible students for payment periods that begin on 
    or after May 1 of the previous award year but end prior to the 
    beginning of the current award year.
    
    PART 690--FEDERAL PELL GRANT PROGRAM
    
        22. The authority citation for part 690 continues to read as 
    follows:
    
        Authority: 20 U.S.C. 1070a, unless otherwise noted.
    
        23. Section 690.6 is amended by revising the heading and paragraph 
    (a), and adding new paragraphs (c) and (d) to read as follows:
    
    
    Sec. 690.6  Duration of student eligibility--undergraduate course of 
    study and eligible postbaccalaureate program.
    
        (a) Except as provided in paragraphs (c) and (d) of this section, a 
    student is eligible to receive a Federal Pell Grant for the period of 
    time required to complete his or her first undergraduate baccalaureate 
    course of study.
    * * * * *
        (c) An otherwise eligible student who has a baccalaureate degree 
    and is enrolled in a postbaccalaureate program is eligible to receive a 
    Federal Pell Grant for the period of time necessary to complete the 
    program if--
        (1) The postbaccalaureate program consists of courses that are 
    required by a State for the student to receive a professional 
    certification or licensing credential that is required for employment 
    as a teacher in an elementary or secondary school in that State;
    
    [[Page 42219]]
    
        (2) The postbaccalaureate program does not lead to a graduate 
    degree;
        (3) The institution offering the postbaccalaureate program does not 
    also offer a baccalaureate degree in education;
        (4) The student is enrolled as at least a half-time student; and
        (5) The student is pursuing an initial teacher certification or 
    licensing credential within a State.
        (d) An institution must treat a student who receives a Federal Pell 
    Grant under paragraph (c) of this section as an undergraduate student 
    enrolled in an undergraduate program for title IV purposes.
        24. In Sec. 690.7 paragraph (c) is redesignated as paragraph (d), 
    and a new paragraph (c) is added to read as follows:
    
    
    Sec. 690.7  Institutional participation.
    
    * * * * *
        (c)(1) If an institution loses its eligibility to participate in 
    the FFEL or Direct Loan program under the provisions of 34 CFR 668.17, 
    it also loses its eligibility to participate in the Federal Pell Grant 
    Program for the same period of time.
        (2) That loss of eligibility must be in accordance with the 
    provisions of 34 CFR 668.17(b).
    * * * * *
    [FR Doc. 99-19724 Filed 8-2-99; 8:45 am]
    BILLING CODE 4000-01-U
    
    
    

Document Information

Published:
08/03/1999
Department:
Education Department
Entry Type:
Proposed Rule
Action:
Notice of proposed rulemaking.
Document Number:
99-19724
Dates:
We must receive your comments on or before September 15, 1999.
Pages:
42206-42219 (14 pages)
RINs:
1845-AA01
PDF File:
99-19724.pdf
CFR: (18)
34 CFR 668.8
34 CFR 668.32
34 CFR 668.161
34 CFR 673.5
34 CFR 674.10
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