description: tags: FR11022007

Thursday,November 1, 2007

Part III

Department of Education

34 CFR Parts 668, 674, 676 et al.Federal Student Aid Programs; Final Rule

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Federal Register

/Vol. 72, No. 211/Thursday, November 1, 2007/Rules and Regulations

DEPARTMENT OF EDUCATION34 CFR Parts 668, 674, 676, 682, 685,690, and 691

[Docket ID ED–2007–OPE–0134]RIN 1840–AC91

Federal Student Aid Programs

AGENCY

:

Office of PostsecondaryEducation, Department of Education.

ACTION

:

Final regulations.

SUMMARY

:

The Secretary amends theregulations on the Student AssistanceGeneral Provisions; Federal PerkinsLoan (Perkins Loan) Program; FederalSupplemental Educational OpportunityGrant (FSEOG) Program; Federal FamilyEducation Loan (FFEL) Program;William D. Ford Federal Direct Loan(Direct Loan) Program; Federal PellGrant (Pell Grant) Program; AcademicCompetitiveness Grant (ACG) Program;and National Science and MathematicsAccess to Retain Talent Grant (NationalSMART Grant) Program. The regulationsreduce administrative burden forprogram participants, provide benefitsto students and borrowers, and protecttaxpayers’ interests.

DATES

:

Effective Date:

These regulationsare effective July 1, 2008.

Implementation Date:

The Secretaryhas determined, in accordance withsection 482(c)(2)(A) of the HigherEducation Act of 1965, as amended(HEA) (20 U.S.C. 1089(c)(2)(A)), thatinstitutions, lenders, guaranty agencies,and loan servicers that administer TitleIV, HEA programs may, at theirdiscretion, choose to implement allprovisions of these final regulations onor after November 1, 2007. For furtherinformation, see the section entitledImplementation Date of TheseRegulations in the

SUPPLEMENTARY

INFORMATION

section of this preamble.

FOR FURTHER INFORMATION CONTACT

:

Michelle Belton, U.S. Department of Education, 1990 K Street, NW., 8thFloor, Washington, DC 20006–8502.Telephone: (202) 502–7821 or via theInternet at:

Michelle.Belton@ed.gov.

If you use a telecommunicationsdevice for the deaf (TDD), you may callthe Federal Relay Service (FRS) at 1–800–877–8339.Individuals with disabilities mayobtain this document in an alternativeformat (e.g., Braille, large print,audiotape, or computer diskette) onrequest to the contact person listed inthis section.

SUPPLEMENTARY INFORMATION

:

On August8, 2007, the Secretary published a noticeof proposed rulemaking (NPRM) for theStudent Assistance General Provisions,Perkins Loan Program, FSEOG Program,FFEL Program, Direct Loan Program,Pell Grant Program, ACG Program, andNational SMART Grant Program in the

Federal Register

(72 FR 44620).In the preamble to the NPRM, theSecretary discussed on pages 44621through 44635 the major changesproposed in that document tostrengthen and improve theadministration of the Federal studentfinancial aid programs authorized underTitle IV of the Higher Education Act of 1965, as amended (HEA). These includethe following:

•

Amending §668.2 to add adefinition for ‘‘professional degree’’ andto harmonize and consolidatedefinitions for ‘‘full-time student,’’‘‘graduate or professional student,’’‘‘half-time student,’’ ‘‘three-quarter timestudent,’’ and ‘‘undergraduate student.’’

•

Amending §§668.4, 668.22,668.164, 682.200, 682.604, and 685.301to align disbursements, with a fewexceptions, for all Title IV grant andloan programs on a payment period basis.

•

Amending §668.10 to define‘‘independent study’’ as a course of study with predefined objectives wherea student works with a faculty memberto decide how those objectives will bemet.

•

Amending §§668.21, 682.604, and685.303 to consolidate all requirementsaddressing the treatment of Title IVfunds (except Federal Work Study)when a student does not beginattendance in a payment period orperiod of enrollment by moving therequirements for FFEL and Direct Loanfunds from §§682.604 and 685.303,respectively, to §668.21.

•

Amending §668.22 to allowinstitutions to make a directdisbursement of any Title IV grant fundsthat make up a post-withdrawaldisbursement without notifying astudent and obtaining the student’spermission.

•

Amending §668.164 to establishtimeframes for returning Title IV, HEAprogram funds that an institutionattempts to disburse directly to astudent or parent, but the student orparent does not receive or negotiatethose funds.

•

Amending §668.164 to allowinstitutions to pay for prior-year chargesof up to $200.

•

Amending §668.164(c) to modifythe provisions for issuing a check andadd new provisions expanding the useof electronic funds transfers (EFTs) to bank accounts that underlie stored-value cards and other transactiondevices.

•

Amending §668.164(g) to extendthe period within which an institutionis allowed to make a late disbursementfrom 120 to 180 days and to eliminatean institution’s ability to request fundsafter that period expires.

•

Amending §668.165(a) to requireinstitutions to either obtain affirmativeconfirmation from a student prior todisbursing a loan or notify a student noearlier than 30 days before, but no laterthan seven days after crediting astudent’s account with loan proceeds,and give students 30 days to cancel allor a portion of the loan.

•

Amending §668.166 to expand thedefinition of excess cash to include TitleIV, HEA program funds received fromthe Secretary that are deposited ortransferred into the institution’s Federal bank account as a result of an awardcancellation, adjustment, or recovery; toeliminate the three percent excess cashtolerance option; and to simplify theprovisions addressing the consequencesfor maintaining excess cash.

•

Amending §§674.16 and 676.16 toeliminate the single disbursementprovisions that currently exist in thePerkins Loan and FSEOG programs.

•

Amending §§682.603 and 685.301to allow institutions that use credithours with terms that are at least nineweeks and substantially equal in lengthto make a full loan for a single term; andto allow institutions that use credithours without terms or without termsthat are substantially equal in lengthwith no term less than nine weeks inlength, or that use clock hours to certifya loan for the remaining balance of thestudent’s annual loan limit for theremaining portion of a program for atransfer student or a student who hascompleted one degree and willimmediately begin another degree at thesame institution.

•

Amending §§682.603 and 685.301to allow students to progress to the nextannual loan limit if they complete anacademic year in calendar time in anonstandard term credit hour program if the terms in that program aresubstantially equal in length and are atleast nine weeks in length.

•

Amending §§690.63 and 690.66 toallow institutions that offer programswith semesters, trimesters, or quartersand have terms for different cohorts of students that start periodically to usethe same Pell formula as that used fortraditional programs; to amend the Pellcalculation for programs using clockhours or credit hours without terms; andto adjust the Pell calculation forcorrespondence study programs.

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Federal Register

/Vol. 72, No. 211/Thursday, November 1, 2007/Rules and Regulations

Implementation Date of TheseRegulations

Section 482(c) of the HEA requiresthat regulations affecting programsunder Title IV of the HEA be publishedin final form by November 1 prior to thestart of the award year (July 1) to whichthey apply. However, that section alsopermits the Secretary to designate anyregulation as one that an entity subjectto the regulation may choose toimplement earlier and the conditionsunder which the entity may implementthe provisions early.Consistent with the intent of thisregulatory effort to strengthen andimprove the administration of the TitleIV, HEA programs, the Secretary isusing the authority granted her undersection 482(c) to designate all of theregulations included in this documentfor early implementation at thediscretion of each institution, lender,guaranty agency, or servicer, asappropriate.

Analysis of Comments and Changes

The regulations in this documentwere developed through the use of negotiated rulemaking. Section 492 of the HEA requires that, before publishingany proposed regulations to implementprograms under Title IV of the HEA, theSecretary obtain public involvement inthe development of the proposedregulations. After obtaining advice andrecommendations, the Secretary mustconduct a negotiated rulemakingprocess to develop the proposedregulations. All proposed regulationsmust conform to agreements resultingfrom the negotiated rulemaking processunless the Secretary reopens thatprocess or explains any departure fromthe agreements to the negotiatedrulemaking participants.These regulations were published inproposed form on August 8, 2007, inconformance with the consensus of thenegotiated rulemaking committee.Under the committee

’

s protocols,consensus meant that no member of thecommittee dissented from the agreed-upon language. The Secretary invitedcomments on the proposed regulations by September 7, and in response to theSecretary

’

s invitation, 22 partiessubmitted comments on the proposedregulations. An analysis of thecomments and the changes in theregulations since publication of theNPRM follows.We group major issues according tosubject, with appropriate sections of theregulations referenced in parentheses.We discuss other substantive issuesunder the sections of the regulations towhich they pertain. Generally, we donot respond to technical and otherminor changes

—

and suggested changesthe law does not authorize the Secretaryto make. We also do not respond tocomments pertaining to issues that werenot within the scope of the NPRM.

General Definitions (§668.2)

Comments: In general, commenterssupported the proposed changes in

§

668.2. With regard to the definition of

‘‘

full-time student,

’’

one commenterrequested that the Department notincrease the number of clock hoursrequired to be considered full-time asthat would affect the amount of time astudent must be enrolled to beconsidered part-time.

Discussion:

These regulations do notinclude any provisions that increase thenumber of clock hours required for full-time students. The Departmentoriginally considered changing thenumber of clock hours required for astudent to be considered a full-timestudent, but withdrew this proposalduring the negotiated rulemakingsessions because this change couldunfavorably affect part-time clock hourstudents.

Change:

None.

Comments:

We received commentsfrom two institutions regarding thedefinitions of

‘‘

graduate or professionalstudent

’’

and

‘‘

undergraduate student

’’

and the clarification of when a studentis considered an undergraduate in adual degree program. One of thecommenters noted that this clarificationis welcomed in light of the fact that

‘‘

there has been considerable growth insuch programs, often co-minglingundergraduate coursework, making itdifficult to determine exact eligibilityfor Title IV aid. By considering suchstudents to be undergraduates for thefirst three years of the academicprogram, this confusion will be greatlyreduced.

’’

The other commenter agreedwith this regulatory change but only if institutions are allowed to use their owndefinition of academic year whendetermining the

‘‘

third year.

’’

Discussion:

The term

‘‘

academic year

’’

is defined in section 481 of the HEA.Generally, institutions that participatein the Title IV, HEA programs andmeasure their program length in credithours are required to define theiracademic year as at least 30 weeks of instructional time during which a full-time student in an undergraduateprogram is expected to complete at least24 semester or trimester credit hours or36 quarter credit hours of study.Institutions that participate in the TitleIV, HEA programs and measure theirprogram length in clock hours arerequired to define their academic yearas at least 26 weeks of instructional timeduring which a full-time student in anundergraduate program is expected tocomplete at least 900 clock hours.However, the statutory purpose behindthe definition of an academic year is todetermine the minimum period of timefor which we will pay a student anacademic year

’

s worth of financial aid.Determining

‘‘

grade level

’’

for thepurpose of categorizing a student aseither a graduate or professional studentor an undergraduate student is notrelated to the issue the HEA addresseswith the definition of an academic year.Therefore, we agree with the commenterwho suggested that an institution can,without reference to the statutorydefinition of an academic year, definewhat a year is in its programs forpurposes of determining when a studentis an undergraduate student or agraduate or professional student.

Change:

The definition of

‘‘

graduateor professional student

’’

in

§

668.2 isamended by using the term

‘‘

year

’’

instead of

‘‘

academic year

’’

in paragraph(3). In addition, the definition of

‘‘

undergraduate student

’’

in

§

668.2 issimilarly amended by using the term

‘‘

year

’’

instead of

‘‘

academic year

’’

inthose places that describe the length of a course of study or a program.

Comment:

We received one commentrequesting the Department to consideraltering the definitions for

‘‘

graduate orprofessional student

’’

and

‘‘

undergraduate student

’’

to reflect thelanguage that is currently used in theDepartment

’

s Federal Student Aid (FSA)Handbook for consistency and clarity. Inparticular, the commenter asked theDepartment to (1) consider adopting thedefinition for an

‘‘

undergraduatestudent

’’

as it appears in the handbook,(2) use the term

‘‘

program

’’

consistentlythroughout the regulations, (3) changethe term

‘‘

institution of highereducation

’’

to

‘‘

eligible institution

’’

since the term

‘‘

institution of highereducation

’’

is defined in the regulationsto exclude proprietary institutions, (4)drop the word

‘‘

first

’’

in the phrases

‘‘

first professional degree

’’

and

‘‘

firstdegree at the baccalaureate level,

’’

and(5) use the term

‘‘

mixed-degreeprograms

’’

rather than

‘‘

dual degreeprograms.

’’

Discussion:

The definition of an

‘‘

undergraduate student

’’

in the FSAHandbook is

‘‘

a student who is enrolledin a program of study that usually doesnot exceed four (and can be up to five)academic years in length and that isdesigned to lead to a degree orcertificate at or below the baccalaureatelevel.

’’

While this definition is correct,it does not address certain studenteligibility or program specific

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