[Federal Register: August 6, 1999 (Volume 64, Number 151)]
[Proposed Rules]
[Page 43023-43042]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au99-32]
[[Page 43023]]
_______________________________________________________________________
Part III
Department of Education
_______________________________________________________________________
34 CFR Parts 668 and 682
Student Assistance General Provisions, Federal Family Education Loan
Program; Proposed Rule
[[Page 43024]]
DEPARTMENT OF EDUCATION
34 CFR Parts 668 and 682
RIN 1845-AA02
Student Assistance General Provisions, Federal Family Education
Loan Program
AGENCY: Department of Education.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Secretary proposes to amend the Student Assistance General
Provisions regulations governing participation in the student financial
assistance programs authorized under Title IV of the Higher Education
Act of 1965, as amended (Title IV, HEA programs) and the Federal Family
Education Loan (FFEL) Program regulations. The student financial
assistance programs include the Federal Pell Grant Program, the campus-
based programs (Federal Perkins Loan, Federal Work-Study (FWS), and
Federal Supplemental Educational Opportunity Grant (FSEOG) Programs),
the William D. Ford Federal Direct Loan (Direct Loan) Program, the
Federal Family Education Loan (FFEL) Program, and the Leveraging
Educational Assistance Partnership (LEAP) Program (formerly called the
State Student Incentive Grant (SSIG) Program). The Federal Family
Education Loan Program regulations govern the Federal Stafford Loan
Program (subsidized and unsubsidized), the Federal Supplemental Loans
for Students Program (no longer active), the Federal PLUS Program, and
the Federal Consolidation Loan Program (formerly collectively known as
the Guaranteed Student Loan Programs).
These proposed regulations implement statutory changes made to the
Higher Education Act of 1965, as amended (HEA), by the Higher Education
Amendments of 1998 Public Law 105-244, (the 1998 Amendments) for the
treatment of Title IV, HEA program funds when a student withdraws from
an institution.
DATES: We must receive your comments on or before September 15, 1999.
ADDRESSES: Address all comments about these proposed regulations to
Wendy Macias, U.S. Department of Education, P.O. Box 23272, Washington,
DC 20202-3272. If you prefer to send your comments through the
Internet, use the following address: returntiv@ed.gov
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: Wendy Macias, U.S. Department of
Education, 7th and D Street, SW, ROB-3, Room 3013, Washington, DC
20202. 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 person listed in the preceding
paragraph.
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
comment addresses and to arrange 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 program.
During and after the comment period, you may inspect all public
comments about these proposed regulations in Room 3045, Regional Office
Building 3, 7th and 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
[[Page 43025]]
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 of
the HEA. 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 negotiating Committee
III on the issues addressed in this package of proposed rules.
Committee III was made up of the following members:
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 for Equal Opportunity in Higher Education
National Association of College and University Business Officers
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, except for the proposed implementation of
the ``50% discount'' on Title IV, HEA program grant funds that a
student must return in Sec. 668.22(h)(3)(ii).
Background
Section 485 of the Higher Education Amendments of 1998, Public Law
105-244, enacted October 7, 1998 (the 1998 Amendments) substantially
revised the requirements of section 484B of the Higher Education Act of
1965, as amended (the HEA).
Prior to the 1998 Amendments, section 484B required all schools
participating in the Title IV, HEA programs to use specific refund
policies when a student who receives Title IV, HEA program funds ceases
attendance. The refund policies determined the amount of institutional
charges that an institution had earned when a student withdrew, and the
amount that was unearned and had to be refunded. In addition, section
485(a) of the HEA specified an order of return of unearned funds from
all sources of financial aid, not just the Title IV, HEA programs.
Under the 1998 Amendments, section 484B of the HEA does not dictate
an institutional refund policy. Instead, section 484B prescribes the
amount of Title IV, HEA program assistance a student has earned as of
the time he or she ceases attendance. The amount of Title IV, HEA
program assistance earned is based on the amount of time the student
spent in academic attendance; it has no relationship to the student's
incurred institutional charges.
Because section 484B now deals with only the earning of Title IV,
HEA program funds, the order of return of unearned funds no longer
includes funds from sources other than the Title IV, HEA programs.
The new requirements do not prohibit an institution from developing
its own refund policy or complying with refund policies required by
outside agencies.
Summary of Proposed Changes
A summary of the proposed changes to the regulations to implement
these statutory changes and issues on which the Secretary particularly
invites comments follows.
Section 668.22(a) General
The statute requires that if a recipient of Title IV grant or loan
funds withdraws from an institution after beginning attendance, the
amount of Title IV, HEA program assistance earned by the student must
be determined. If the amount the student was disbursed is greater than
the amount the student earned, unearned funds have to be returned. If
the amount the student was disbursed is less than the amount the
student earned, the student is eligible to receive a late disbursement
in the amount of the earned aid that the student had not received.
At the negotiated rulemaking sessions, the Department's negotiator
stated the Department's belief that this change to the statute makes
clear that Title IV, HEA program funds are awarded to a student under
the assumption that the student will attend an institution for the
entire period for which the assistance is awarded. When a student
ceases academic attendance prior to the end of that period, the student
may no longer be eligible for the full amount of Title IV, HEA program
funds that the student was originally scheduled to receive.
Title IV Grants and Loans
The statute requires that the calculation of earned Title IV, HEA
program assistance include all Title IV grant and loan funds that were
disbursed or that could have been disbursed to a student. The statute
specifies that Federal Work-Study (FWS) funds are not included in the
calculation. These proposed regulations would clarify when Federal
Supplemental Educational Opportunity Grant (FSEOG) program funds should
and should not be included in the calculation.
The committee agreed that only funds that are clearly Title IV, HEA
grant or loan funds must be included in the calculation. These proposed
regulations would exclude from the calculation the non-Federal share of
FSEOG awards when an institution meets its FSEOG matching share by
either the individual recipient method or the aggregate method. In
other words, if an institution meets its matching share requirement by
putting funds in the FSEOG fund (otherwise known as the fund-specific
matching method), those funds must be included in the calculation;
otherwise, the non-Federal share of FSEOG awards is excluded from the
calculation.
Several negotiators asked for clarification of the treatment of
funds from the Leveraging Education Assistance Partnership (LEAP)
program, formerly known as the State Student Incentive Grant (SSIG)
program. The Department's negotiator stated the Department's view that
the guidance of Dear Colleague Letter GEN-89-38, which addresses the
treatment of LEAP funds when a student withdraws, is still applicable.
Although not specified in the proposed regulations, this longstanding
policy provides that, if a State agency specifically identifies a
student's State grant as LEAP funds, the State grant funds must be
considered Title IV, HEA grant funds for purposes of this calculation.
If an institution does not know whether a particular student's State
grant contains LEAP funds, the
[[Page 43026]]
grant would not have to be included in the calculation. The committee
agreed that this policy facilitates the accurate identification of
Federal funds and agreed that the continuation of this policy was
reasonable. The Department will provide updates to the guidance of GEN-
89-38 once these regulations are final.
Title IV Aid Disbursed
For consistency and administrative clarity, the committee agreed
that it is necessary to identify a point in time that institutions
would use for all students who withdraw to determine the amount of aid
that was disbursed, since this amount is critical to determining if a
return of Title IV, HEA program assistance is required. During
negotiated rulemaking, the committee discussed whether this ``snap
shot'' should occur as of the student's withdrawal date. Some
negotiators pointed out that an institution sometimes inadvertently
disburses funds to a student who is no longer in attendance. For
example, a student drops out on Friday. Because the institution is
unaware that the student is no longer in attendance, the institution
makes a scheduled disbursement of aid to the student on the next
Monday. Some negotiators felt that this inadvertent overpayment should
be included as disbursed aid in the calculation of the amount of aid
earned. They felt it was unduly burdensome to require an institution to
immediately return the inadvertent overpayment since a portion of those
funds may have been earned and would have to be re-disbursed. If any of
the overpayment were not earned, they suggested that it could be
returned in accordance with the requirements of this section for the
return of unearned funds.
The committee agreed to move the snap-shot point to the date of the
institution's determination that the student withdrew to allow such
inadvertent overpayments to be counted as disbursed aid. (The proposed
definition of the ``date of the institution's determination that the
student withdrew'' is addressed in the discussion of Sec. 668.22(l).)
Institutions are expected to have the administrative capability to
prevent these types of overpayments on a routine basis, particularly if
funds are being paid to the student rather than credited to a student's
account. A pattern or practice of making these inadvertent overpayments
would be questioned in a program review. The Secretary agreed to
include these overpayments in the calculation of total aid disbursed
only for purposes of easing an institution's administrative burden in
what should be a very limited number of circumstances. This provision
would not supercede the requirements of Sec. 668.164(b)(1) and the
applicable program regulations which require that an institution may
disburse Title IV, HEA program funds only if the student is enrolled
for classes for the payment period and is eligible to receive those
funds.
In keeping with this snap-shot approach, when a return of Title IV,
HEA program funds is due, these proposed regulations would prohibit
additional disbursements to the student after the date of the
institution's determination that the student withdrew. The negotiators
discussed the possibility of permitting an institution to adjust a
student's disbursed aid by making late disbursements of aid before
applying the requirements for determining and returning any unearned
Title IV, HEA program assistance. Some negotiators felt that this could
benefit the student in some cases. For example, if the institution had
disbursed loan funds before the student withdrew and could have also
disbursed grant funds, the institution could disburse the grant funds
after becoming aware that the student withdrew in order to replace the
loan funds, thereby reducing the student's loan debt.
After much discussion by the committee, it was decided that there
are too many variables involved to permit institutions to make case-by-
case determinations of whether post-withdrawal adjustments to a
student's aid disbursement are appropriate. The committee agreed that
it is not appropriate for an institution to disburse additional funds
to a student or to a student's account after the institution becomes
aware that the student has withdrawn, unless the institution determines
that more funds were earned than had been disbursed. The Title IV, HEA
program funds were made available to the student with the expectation
that the student would complete the period for which the funds were
provided, and that expectation is no longer present once a student has
withdrawn. Before disbursing any additional funds on behalf of a
withdrawn student, the proposed regulations would require the
institution to determine that the student has earned those funds under
the provisions of these proposed regulations.
Late Disbursements
The committee agreed that the requirements for a late disbursement
due under section 484B of the HEA should be as similar as possible to
the requirements under Subpart K--Cash Management of the Student
Assistance General Provisions regulations. However, in some cases, the
committee acknowledged that the existing cash management provisions are
inappropriate in this context, or are superceded by section 484B of the
HEA.
These proposed regulations contain a provision that any late
disbursement due under this section must meet the current required
conditions for late disbursements found in Sec. 668.164(g)(2). This
cash management provision lists the conditions that must have been met
prior to the date that the student became ineligible in order for an
institution to make a late disbursement. For example, the institution
must have received the student's Student Aid Report (SAR) or
Institutional Student Information record (ISIR) with an official
expected family contribution (EFC).
The committee agreed that Sec. 668.164(g)(1) and (g)(3) are not
applicable to a late disbursement resulting from a student's
withdrawal. Section 668.164(g)(1) currently states that an institution
may make a late disbursement to a student who became ineligible solely
because of a change in enrollment status. The requirements of section
484B remove the discretion that is provided in Sec. 668.164(g)(1) for
an institution to determine whether a late disbursement should be made.
Section 668.164(g)(3) currently specifies that a late disbursement
must be for incurred educational costs, and must be made within 90 days
of the date that the student becomes ineligible. The committee agreed
that this provision was inapplicable because, as mentioned previously,
the determination of the amount of Title IV, HEA program assistance
that the student has earned has no relationship to incurred educational
costs. The committee agreed that 90 days is a reasonable amount of time
for an institution to make a late disbursement. However, the committee
believed that a late disbursement made as the result of a withdrawal
should be made within 90 days of the date of the institution's
determination that the student withdrew, rather than within 90 days of
the date that the student becomes ineligible. This proposed timeframe
is addressed later in this discussion.
These proposed regulations would reflect the cash management
requirements for disbursing Title IV, HEA program funds. Specifically,
these proposed regulations would allow an institution to credit a
student's account with a late disbursement without the
[[Page 43027]]
student's (or parent's, in the case of a PLUS loan) permission for
current charges for tuition, fees, and room and board (if the student
contracts with the institution) up to the amount of outstanding
charges. For other current charges for educationally-related
activities, the institution would need a student's (or parent's for
PLUS loan funds) authorization to credit the student's account. These
proposed regulations would allow an institution to use a student's or
parent's authorization that is obtained prior to the student's
withdrawal date for this purpose, so long as that authorization meets
the requirements of Sec. 668.165(b). If the institution did not obtain
authorization prior to the student's withdrawal, the institution would
have to obtain authorization in accordance with Sec. 668.165(b)(2)
before the institution could credit the student's account for other
current charges for educationally-related activities. The institution's
request for the student's or parent's authorization must make clear
that if the student or parent does not give permission for the
institution to credit the student's account with the Title IV, HEA
program funds, these funds will be disbursed directly to the student or
parent, as applicable, if the student or parent accepts the funds.
The committee considered whether to require an institution to make
a late disbursement directly to a student. They also discussed whether
prior authorizations from the student to permit the institution to
credit his or her account would apply or if the institution would have
to obtain authorization from the student after the student's
withdrawal. However for consistency between this section and the
existing cash management requirements, the committee decided that the
proposed regulation should generally mirror the current cash management
requirements for the disbursement of funds.
However, these proposed regulations would deviate from the cash
management provisions in Subpart K for the disbursement of Title IV,
HEA program funds by not permitting an institution to credit a
student's account for any prior award year charges. This is because
section 484B of the HEA specifies that earned Title IV, HEA program
funds must be determined for the payment period or period of enrollment
in which a student withdraws. Therefore, Title IV, HEA program funds
that are earned under section 484B are earned for current charges only.
These proposed regulations would mirror the current cash management
provisions in Sec. 668.165 that require an institution to provide
notice to a student, or parent in the case of a PLUS loan, when the
institution credits a student's account with Direct Loan, FFEL or
Federal Perkins Loan Program funds.
The statute requires that earned funds in excess of those credited
to a student's account must be provided to the student. However, in
recognition of the difficulty an institution may have in trying to
locate a student who has ceased attendance at the institution, these
proposed regulations would require that an institution would have to
offer in writing to the student (or parent for PLUS loan funds) any
amount of a late disbursement that is not credited to a student's
account. The committee agreed that the written notification must
include the information necessary for the student or parent to make an
informed decision as to whether the student or parent would like to
accept any of the disbursement. These proposed regulations would base
the requirements for notification on the cash management requirements
for an institution's notification to a student or parent when an
institution credits a student's account with Title IV, HEA loan funds
(Sec. 668.165(a)). This notification would have to be provided for late
disbursements of both Title IV grant and loan funds that are available
for direct disbursement. The Secretary specifically requests comments
on whether the proposed timeframes discussed below, which are based on
the timeframes established in the cash management regulations, are
appropriate for a student who has withdrawn from school.
The committee agreed that, although a student or parent always has
the option of declining a direct disbursement of loan funds by
returning or not endorsing the loan check, it is essential that this
option be brought to the student's or parent's attention when the
student has ceased attendance and may have compromised his or her
ability to earn the funds necessary to repay additional loan debt.
Under these proposed regulations, an institution would be expected
to send the notification as soon as possible, but no later than 30
calendar days after the date that the institution determines that the
student withdrew. The notice would have to identify the type and amount
of the Title IV, HEA program funds that make up the late disbursement,
and explain that the student or parent may decline all or a portion of
those funds. This information must be provided to permit a student or
parent to determine which funds, if any, he or she wishes to decline.
The institution would have to advise the student or parent in the
notification that the student or parent would have 14 calendar days
from the date that the institution sent the notification to accept a
late disbursement. The notification would have to make it clear that if
the student or parent did not respond to the notification within the
timeframe, the institution would not be required to make the late
disbursement. However, an institution could choose to make a late
disbursement based on acceptance by a student or parent after the 14
calendar days. Fourteen days is the same period of time that is
permitted for a student or parent to respond to a notification of the
ability to cancel a loan disbursement that is credited to the student's
account. The committee agreed that this period of time provides
sufficient response time for a student or parent and also meets the
administrative needs of the institution.
This NPRM proposes that if a student or parent submits a timely
response accepting all or a portion of a late disbursement, the
institution must disburse the funds within 90 days of the date of the
institution's determination that the student withdrew. The committee
agreed that an institution's responsibility for paying a late
disbursement should start when the institution first becomes aware that
a student has ceased attendance at the institution. The proposed
definition of the term ``date of the institution's determination that
the student withdrew'' is addressed in the discussion of
Sec. 668.22(l). The Secretary notes that the date of the institution's
determination that the student withdrew is the same date that would
trigger the 30-day period that the institution has for notifying the
student or parent of any late disbursement available for direct
disbursement. Consequently, under this proposal, the sooner an
institution sends the notification to a student or parent, the more
time the institution would have to make any accepted late disbursement.
The Secretary believes that it would be reasonable to permit an
institution to use one notification to (1) notify the student or parent
that loan funds were credited to the student's account; (2) request
permission to credit the student's account for other current charges
for educationally-related activities, if prior authorization had not
been obtained; and (3) notify the student or parent of the availability
of any remaining earned Title IV, HEA program assistance.
[[Page 43028]]
To keep the student or parent properly informed about the Title IV,
HEA program assistance that he or she received or did not receive, this
NPRM proposes that an institution must inform a student or parent in
writing or electronically concerning the outcome of any late
disbursement request. For example, an institution must inform a student
if it will not make a late disbursement because the student's request
was not received within the 14-day timeframe.
Finally, this NPRM proposes that a late disbursement, whether
credited to the student's account or disbursed to the student or parent
directly, must be made from available grant funds before available loan
funds since it is in the best interest of the student to minimize loan
debt. ``Available'' grant or loan funds refers to Title IV, HEA program
assistance that could have been disbursed to the student, but was not
disbursed as of the date of the institution's determination that the
student withdrew. For example, if a student is due a late disbursement
of $500, and the student has received $400 of $1,000 in Federal Pell
Grant funds that could have been disbursed, and $1,200 of the $2,000 in
Federal Stafford Loan funds that could have been disbursed, the
available undisbursed funds are $600 in Federal Pell Grant funds, and
$800 in Federal Stafford loan funds. Any portion of the $500 late
disbursement that the institution makes must be made from the $600 in
available Federal Pell Grant funds.
The following example illustrates the major principles of the
proposed late disbursement procedures. Michael drops out of school on
November 5. On November 10, the institution becomes aware that Michael
ceased attendance. Using these proposed regulations, the institution
determines that because Michael has earned $900 in Title IV, HEA
program assistance that he has not received, Michael is due a late
disbursement of $900. When Michael withdrew, only $600 of the $1,000 in
Federal Pell Grant funds that could have been disbursed to him had been
disbursed. Of the $2,000 in Federal Stafford Loan funds that could have
been disbursed, only $1,200 had been disbursed. The institution
determines that Michael has $50 in outstanding tuition charges and $100
in outstanding parking fines for the payment period. The institution
credits Michael's account with $50 of Michael's Federal Pell Grant
funds. The institution wants to use another $100 of Michael's late
disbursement to cover the outstanding parking fines. However, the
institution has not received permission from Michael prior to his
withdrawal to credit his account for educationally-related charges
other than tuition and fees and room and board.
On November 12, the institution sends a notification to Michael
that states that (1) he is due a late disbursement of $900, that
comprises $400 in Federal Pell Grant funds and $500 in Federal Stafford
Loan funds; (2) $50 of the Federal Pell Grant funds were credited to
his account for tuition charges, so Michael has a remaining potential
late disbursement of $850; (3) Michael may accept all, a portion, or
none of the $850; (4) the institution is obligated to make a late
disbursement of funds only if Michael accepts the funds by November 26,
14 days after the institution sent the notification; (5) the
institution is requesting Michael's permission to credit his account
with an additional $100 of the Federal Pell Grant funds to cover his
unpaid parking fines; and (6) if Michael does not authorize the
institution to credit his account with the $100 of Federal Pell Grant
funds, those funds will be disbursed to Michael if he chooses to accept
them. The institution could have sent the notification no later than
December 10; that is, 30 days after the date of the institution's
determination that the student withdrew.
Michael responds on November 19. Michael authorizes the institution
to apply $100 of the Federal Pell Grant funds to his outstanding
parking fines. Michael accepts the remaining $250 in Federal Pell Grant
funds, but declines the $500 in Federal Stafford Loan funds to minimize
his overall loan debt.
The institution sends Michael a check for the $250 in Federal Pell
Grant funds and a letter confirming that $100 of the Federal Pell Grant
funds will be credited to his account and no additional loan funds will
be disbursed. The institution has until February 8, which is 90 days
from the date of the institution's determination that the student
withdrew, to disburse the $250 in Federal Pell Grant funds to Michael
and to credit his account with the $100 of Federal Pell Grant funds to
cover his outstanding parking fines.
Section 668.22(b) Determining a Student's Withdrawal Date at an
Institution That Is Required To Take Attendance
These proposed regulations would limit the definitions of
withdrawal date in Sec. 668.22(b) and (c) to the determination of the
amount of Title IV, HEA program assistance that a student has earned
upon withdrawal. An institution would not be required to use these
withdrawal dates for their own institutional refund policies or for any
other purpose. The committee agreed that this approach is consistent
with the view that an institution's refund policy and other academic
procedures are separate from these new procedures for determining the
amount of Title IV, HEA program assistance earned when a student
withdraws.
This proposed definition of withdrawal date (and the proposed
definition of withdrawal date in Sec. 668.22(c)) is for purposes of
determining the amount of aid a student has earned. It is not
necessarily the date that ``starts the clock'' for the return of the
Title IV, HEA program funds by the institution. In Sec. 668.22(j), this
NPRM proposes a timeframe, beginning on the date of the institution's
determination that the student withdrew, for the return of unearned
Title IV, HEA program funds. The term ``date of the institution's
determination that the student withdrew'' is discussed under
Sec. 668.22(l).
Last Date of Academic Attendance
Section 484B(c)(1)(B) of the HEA provides that, for institutions
that are required to take attendance, the day the student withdrew is
determined by the institution from the institution's attendance
records. These proposed regulations would define this withdrawal date
as the last date of academic attendance, as determined by the
institution from its attendance records.
The committee discussed whether the statute could be interpreted to
allow an institution to use a student's last date of attendance from
the institution's attendance records as a basis for determining the
student's withdrawal date, rather than as the actual withdrawal date.
For example, if an institution's records show that a student's last
date of academic attendance is November 15, but the institution is not
aware that the student left until November 22, the institution might
use November 22 as the student's withdrawal date. One negotiator felt
that this approach was more equitable because it would take into
account costs that are incurred by the student after the student's last
date of attendance.
At the negotiated rulemaking sessions, the Department's negotiator
made clear that the Department's view is that the goal in defining a
student's withdrawal date is to identify the date that most accurately
reflects the point when the student ceased academic attendance, and
that this goal is best met by using the student's last date of academic
attendance. The amount of Title IV, HEA program assistance that is
[[Page 43029]]
earned is a reflection of the amount of time a student spent in
academic attendance, not a reflection of institutional costs that are
incurred by the student. The committee agreed to define the withdrawal
date for an institution that is required to take attendance as the last
date of academic attendance as determined by the institution from its
attendance records. Thus, in the example just cited, the withdrawal
date would be November 15, not November 22.
Required To Take Attendance
At the negotiated rulemaking sessions, the committee discussed
whether an institution that elects to take attendance should be
considered an institution that is required to take attendance for
purposes of calculating the amount of Title IV, HEA program assistance
when a student withdraws. The committee decided that only an
institution that is required to take attendance by an outside entity
would be considered an institution that is required to take attendance.
Examples of outside agencies that may require an institution to take
attendance are an institution's accrediting agency or an institution's
state licensing agency.
At the negotiated rulemaking sessions, the Department's negotiator
also suggested that an institution that is required to take attendance
for even a portion of the payment period or period of enrollment should
be considered an institution that is required to take attendance. Some
negotiators thought that the Department's interpretation was too
restrictive. The negotiators cited an example in which an institution's
State agency requires the institution to take attendance for the first
two weeks of a program to establish a census of students. The
negotiators did not believe that attendance records for census purposes
would be appropriate for determining a student's withdrawal date. For
this reason, the committee agreed that the proposed regulations should
not include a reference to institutions that are required to take
attendance for only a portion of the period. The Secretary requests
comment on whether an institution that is required to take attendance
for a longer portion of the payment period or period of enrollment
should be considered an institution that is required to take attendance
for purposes of determining a student's withdrawal date under these
proposed regulations. For example, should an institution that is
required to take attendance just beyond the 60 percent point of the
period (the point at which the student would earn 100 percent of his or
her Title IV, HEA program assistance) have to use its attendance
records to determine a student's withdrawal date?
Student Does Not Return From a Leave of Absence
The committee agreed that if a student does not return to the
institution at the expiration of an approved leave of absence, the most
appropriate withdrawal date for the student is also the last date of
academic attendance as determined by the institution from its
attendance records. Leaves of absence are addressed in the discussion
of proposed Sec. 668.22(d).
Section 668.22(c) Determining a Student's Withdrawal Date at an
Institution That Is Not Required To Take Attendance
As mentioned in the discussion of proposed Sec. 668.22(b), this
NPRM proposes that the definitions of withdrawal date in
Secs. 668.22(b) and (c) apply only to the determination of the amount
of Title IV, HEA program assistance that a student has earned upon
withdrawal.
The statute lists four types of withdrawal situations for students
who withdraw from institutions that are not required to take attendance
and defines a withdrawal date for each type. The four situations are:
(1) the student began the withdrawal process prescribed by the
institution; (2) the student otherwise provided official notification
to the institution of his or her intent to withdraw; (3) the student
leaves without beginning the institution's withdrawal process or
otherwise providing official notification of his or her intent to
withdraw (an ``unofficial withdrawal''); and (4) the student does not
return to the institution by the expiration of a leave of absence. In
addition, the statute contains a ``special rule'' definition of
withdrawal date for withdrawals that occur because of circumstances
that are beyond the student's control.
Last Date of Attendance at an Academically-Related Activity
The statute does not specifically allow an institution to use an
earlier or later date than those described above, except in the case of
a student who withdraws without providing official notification, in
which case the midpoint is the withdrawal date (situation number 3,
discussed above). In such cases, the statute allows an institution to
document and use a date that is later than the midpoint of the period.
However, as stated previously, the Secretary believes that a student's
withdrawal date should reflect as accurately as possible the point when
the student ceased academic attendance. The Secretary also believes
that an institution should base its determination of that point on the
best information available. Therefore, the committee agreed that these
proposed regulations should allow an institution that is not required
to take attendance always to be able to use a student's last date of
attendance at an academically-related activity, as documented by the
institution, as the student's withdrawal date, in lieu of the
withdrawal dates listed above. Thus, if a student begins the
institution's withdrawal process or otherwise provides official
notification of his or her intent to withdraw and then attends an
academically-related activity after that date, the institution would
have the option of using that last actual attendance date as the
student's withdrawal date provided that the institution documents that
the student attended the activity. Similarly, an institution could
choose to use an earlier date if it believes the last documented date
of attendance at an academically-related activity is a more accurate
reflection of the student's withdrawal date than the date on which that
student began the institution's withdrawal process or otherwise
provided official notification of his or her intent to withdraw.
The concept of using a last date of attendance at an academically-
related activity as a student's withdrawal date is a longstanding one
for the Title IV programs. Consistent with this longstanding policy,
the proposed regulations would not require an institution to take class
attendance in order to demonstrate academic attendance for this
purpose. The regulations would define ``academically-related activity''
and list several examples of activities that meet the definition. An
institution would be permitted to use documentation of a student's
attendance at other activities if those activities met the definition
of an academically-related activity.
An institution would be responsible for determining that the
activity that the student attended is, in fact, academically-related.
The committee agreed that an institution has demonstrated this
responsibility if an employee of the school confirms that the activity
is academically-related. The Secretary does not consider proof that a
student is living in institutional housing nor proof that a student is
participating in a student organized study group to be proof of
academic attendance.
The Secretary notes that activities that meet this definition of an
academically-related activity would not necessarily count as
instructional time for purposes
[[Page 43030]]
of the ``12-hour rule'' found in the definition of ``academic year'' in
Sec. 668.2(b)(2) and in the definition of an eligible program in
Sec. 668.8(b).
Withdrawal Process Prescribed by the Institution
During negotiated rulemaking, the committee discussed whether to
regulate the concept of ``began the withdrawal process.'' Some
negotiators felt that the statute gave the institutions discretion to
define the beginning of their own withdrawal procedure. The committee
agreed to leave the definition of this term up to each institution. The
Secretary notes that section 485(a)(1)(F) of the HEA, as modified by
the 1998 Amendments, requires an institution to make available to
students a statement of the requirements for officially withdrawing
from the institution. The Secretary expects an institution to identify
the beginning of its process as a part of this information. The
Secretary also expects an institution to be able to demonstrate
consistent application of its process, including its determination of
the beginning of the process.
Official Notification
These proposed regulations would define ``official notification to
the institution.'' The committee agreed that ``official notification to
the institution'' occurs when a student notifies an office of the
institution of his or her intent to withdraw. However, the committee
noted that it could be administratively burdensome for an institution
to have to track withdrawal notifications that could be made to any
unspecified office of the institution. Therefore, these proposed
regulations would allow an institution to designate the office or
offices that a student must notify in order for the notification to
count as official notification. An institution would have to designate
at least one office for this purpose. For example, an institution could
designate a dean's, registrar, or financial aid office.
Under these proposed regulations, official notification from the
student could be written or oral. Under this proposal, acceptable
notification would include notification by a student via telephone,
through a designated web site, or notification that is provided orally
in person. If provided orally, the Secretary would expect the
institution to document the conversation with the student.
Resolving Instances Where Student Triggers Two Dates
During the negotiations, the Department's negotiator noted that a
student might both begin the institution's withdrawal process and
otherwise provide official notification to the institution of his or
her intent to withdraw. For example, on November 1, a student calls the
institution's designated office and states his or her intent to
withdraw. Later, on December 1, the student begins the institution's
withdrawal process by submitting a withdrawal form. The Department's
negotiator stated that it is the Department's view that the earlier
date more accurately reflects when the student withdrew. Ultimately,
the committee agreed that if both dates are triggered, the earlier date
would be the student's withdrawal date.
Several negotiators felt that the institution should have the
discretion to choose the more appropriate date. The negotiators felt it
was unfair to require the earlier date if the student continued to
attend the institution after the first notification. Although the
proposed regulations would permit an institution to document a later
``last date of academically-related attendance,'' negotiators felt that
in this situation it was unreasonable to require the institution to
confirm and document the later attendance. The committee agreed to
extend negotiations beyond the five originally-scheduled sessions in
order to continue to address this issue (and the issue of the
determination of the amount of unearned aid to be returned). The
committee agreed that the extension was necessary to continue its
attempts to resolve differences between the Department's negotiator and
other negotiators. After extensive discussions and consideration of
several alternatives, the committee ultimately agreed to the original
interpretation that the withdrawal date should be the earlier of the
two dates (unless the institution chooses to document another last date
of attendance at an academically-related activity), in conjunction with
a provision that clarifies how a student's rescission of his or her
notification of intent to withdraw would be treated (discussed below).
Student Does Not Return From a Leave of Absence
This NPRM proposes that if a student does not return to the
institution at the expiration of an approved leave of absence, the
student's withdrawal date is the date that the student began the leave
of absence. The committee agreed that the date that the student began
the leave of absence most accurately reflects the point when a student
who does not return from the leave ceases academic attendance. Leaves
of absence are addressed in the discussion of proposed Sec. 668.22(d).
Circumstances Beyond the Student's Control
The committee's view was that the special rule that defines a
withdrawal date for students who withdraw due to circumstances beyond
the student's control should apply in two circumstances: (1) a student
who would have provided official notification to the institution of his
or her intent to withdraw was prevented from doing so due to those
circumstances; and (2) a student withdrew due to circumstances beyond
the student's control and a second party provided notification of the
student's withdrawal on the student's behalf.
The committee agreed that for such students the institution should
determine the withdrawal date that most accurately reflects when the
student ceased academic attendance due to the circumstances beyond the
student's control. This date would not necessarily have to be the date
of the occurrence of the circumstance beyond the student's control. For
example, if a student is assaulted, he or she may continue to attend
school, but ultimately not be able to complete the period because of
the trauma experienced. Because the student's withdrawal was the result
of the assault, the withdrawal date would be the date that the student
actually left the institution, not the date of the assault. The
Secretary would expect the institution to document that the student
left at the later date because of issues related to the assault.
Rescission of Intent To Withdraw
These proposed regulations would specify how a student's rescission
of an intent to withdraw would affect the withdrawal date. A student's
rescission would be valid only if the student attends through the end
of the payment period or period of enrollment. As part of the
rescission notification, a student would have to attest that he or she
was continuing academic attendance and that he or she intends to
complete the period. If the student did not complete the payment period
or period of enrollment after the rescission, the withdrawal date would
be the date when the student first provided notification to the school
or began the withdrawal process, unless an institution chooses to use a
documented last date of attendance at an academically-related activity
as the student's withdrawal date.
This language was added to the proposed regulations to clarify how
a
[[Page 43031]]
student's rescission would be treated. The negotiation of this proposed
regulatory language occurred through discussions within a subgroup of
the committee, including the Department's negotiator, after the final
negotiating session (but prior to the reaching of consensus). Although
the committee reached consensus on the proposed regulatory language,
the Secretary wishes to explain the reasons for this provision. The
Secretary is particularly concerned with a situation in which a student
notified the institution of an intent to withdraw, decided to continue
to attend the school, and then withdrew without providing further
notification. The Secretary believes that a student who provides
official notification of his or her intent to withdraw and actually
withdraws should never be treated as a student who left the institution
without providing notification, even if there was a rescission of the
first notification.
Likewise, the Secretary does not believe that a student who
provided notification, decided to continue to attend the school, and
then provided subsequent notification of an intent to withdraw should
have earned aid determined based on the later notification date.
The Secretary is concerned that some students, either on their own
or in response to encouragement by the institution, would attend for a
short period of time after their first notification and then drop out
or provide a second notification in order to increase artificially the
amount of Title IV, HEA program assistance earned.
Acceptable Documentation
During the negotiated rulemaking sessions, the committee considered
whether to specify in the regulations what documentation would be
acceptable to support an institution's determination of a student's
withdrawal date. Several of the negotiators felt that institutions
should have the flexibility to determine the type of documentation that
would best support their determination of the student's withdrawal
date. The negotiating committee agreed that acceptable documentation
should not be delineated in the regulations. However, an institution
would still be required to document all withdrawal dates and maintain
the documentation. The committee agreed that it is reasonable to expect
an institution to have such documentation available as of the date of
the institution's determination that the student withdrew. The proposed
definition of the ``date of the institution's determination that the
student withdrew'' is addressed in the discussion of Sec. 668.22(l).
Unapproved Leave of Absence
The Secretary notes that neither the statute nor the proposed
regulations specify a withdrawal date for a student who takes an
unapproved leave of absence. The Secretary requests comment on whether
such a date should be specified in the regulations.
Section 668.22(d) Treatment of Leaves of Absence
The statute provides that a leave of absence must meet certain
conditions to be counted as a temporary interruption in a student's
education, rather than as a withdrawal. If a leave of absence does not
meet the conditions, the student is considered to have ceased
attendance at the institution (and therefore to have withdrawn from the
institution) and the requirements of section 484B of the HEA would
apply.
For purposes of Sec. 668.22, a leave of absence refers to
circumstances in which a student is not in academic attendance for a
period for which academic attendance is scheduled as part of the
student's program. It does not refer to non-attendance for a scheduled
break in a student's program.
These proposed regulations refer to a leave of absence that does
not have to be considered a withdrawal as an ``approved leave of
absence.'' The statute gives an institution discretion in determining
whether to treat an approved leave of absence as a withdrawal. That is,
a student's leave of absence may meet all the requirements for an
approved leave of absence, but the institution may still treat the
leave of absence as a withdrawal.
The committee noted that term-based credit hour schools allow
students to receive an ``incomplete'' status for coursework that can
be, and is expected to be, completed within a reasonable timeframe
after the term is over. For example, a student may request and receive
an ``incomplete'' because the student failed to turn in an assigned
paper. If a student is assigned an ``incomplete'' status but the
institution determines that the student will likely complete the
required coursework, the student could be considered not to have
withdrawn. If the institution assigns a student a leave status other
than a leave of absence as defined in these proposed regulations just
to keep the student from having to re-apply the next semester, the
student would be considered to have withdrawn, unless he or she was
granted an approved leave of absence under the provisions of this
section. The Secretary notes that under these proposed regulations, a
student on an approved leave of absence must be permitted to complete
the coursework he or she began prior to the leave of absence.
The Secretary specifically requests comment on whether the proposed
definition of a leave of absence for purposes of this section should
apply for purposes of determining whether a student's in-school status
continues for Title IV, HEA program loan purposes.
Number of Leaves of Absence
The statute refers to a student who takes ``a'' leave of absence
from an institution. The committee considered whether a student should
be granted only one leave of absence in a 12-month period or whether
the statute permits a student to take multiple leaves of absence in a
12-month period, as long as the total number of days did not exceed
180. The committee agreed that in some limited instances, it may be
appropriate to permit a student to take more than one leave of absence
within a 12-month period, as long as the total number of days of the
leaves of absence does not exceed 180. This proposal seeks to strike a
balance recognizing that it is often not in the best interest of most
students to have multiple interruptions to their education, but that
one leave of absence may not be sufficient to address the needs of some
students. These proposed regulations do not specify the reasons for
which a single leave of absence may be granted; rather, the institution
would determine if the student's reason for requesting a single leave
of absence is appropriate. Generally, the committee agreed that more
than one leave of absence should be granted for unforeseen
circumstances only. For example, an institution would be able to grant
more than one leave of absence to a student who is unexpectedly called
up for military-reserve duty, or for a student who meets the criteria
covered under the Family and Medical Leave Act of 1993 (FMLA) (Public
Law 103-3), enacted February 5, 1993.
The circumstances that are covered under the FMLA, as applied to
students, are:
Birth of a son or daughter of the student and the need to
care for that son or daughter (for 12 months beginning from the date of
birth of the child),
* Placement of a son or daughter with the student for
adoption or foster care (for 12 months beginning on the date of the
placement),
* Need to care for the student's spouse, or a son, daughter,
or parent, if the spouse, son, daughter, or parent has a serious health
condition, and
[[Page 43032]]
* Serious health condition that makes the student unable to
function as a student.
These proposed regulations would use definitions of terms taken
from the FMLA and its implementing regulations (29 CFR part 825). The
statutory language, with links to the implementing regulations, can be
found on the Internet at http://www.dol.gov/dol/esa/public/regs/
statutes/whd/fmla.htm
The Secretary specifically requests comments on other categories
that commenters believe would warrant the granting of more than one
approved leave of absence in a 12-month period.
The Secretary believes that it would be appropriate for a student
to make only one request for multiple leaves of absence when those
leaves are all requested for the same reason. For example, a student
who will be receiving multiple chemotherapy treatments over the course
of the student's enrollment could submit one request to cover the
recovery time needed for each session.
12-Month Period
The statute requires that the leave of absence not exceed 180 days
in any 12-month period. This NPRM proposes that the 12-month period
would begin on the first day of the student's leave of absence. This
proposal reflects the view that the use of a calendar year or academic
year would not be appropriate. For example, if the use of a calendar
year was permitted, an institution could grant one leave of absence of
180 days from July to December of one year and another leave of absence
for 180 days from January to June of the following year. The committee
did not believe that it would be appropriate to give a student more
than 180 days on a leave of absence within any 12-month period.
Reasonable Expectation of Return
These proposed regulations set conditions for an approved leave of
absence in addition to the minimum conditions required by the statute.
The committee agreed that a leave of absence is an approved leave of
absence if there is a reasonable expectation on the part of the
institution that the student will be able to return to the institution.
It was agreed that it is necessary to specify this condition in the
regulations to prevent an institution from granting a student a leave
of absence merely to delay the return of unearned Title IV, HEA program
funds.
No Additional Charges
This NPRM proposes that an approved leave of absence may not
involve additional charges by the institution. A leave of absence is a
temporary break in the student's attendance during which, for purposes
of determining if the provisions of this proposed rule apply, the
student is considered to be enrolled. Since students are not assessed
additional charges for continuing enrollment, any additional charges to
a student, even de minims re-entry charges, indicate that the student
is not considered to be on an approved leave of absence.
Completion of Coursework Upon Return
This NPRM proposes that in order for a leave of absence to be an
approved leave of absence, the institution must permit the student to
complete the coursework that he or she began prior to the leave of
absence. Approved leaves of absence are viewed as temporary
interruptions in a student's attendance. Therefore, when a student
returns from a leave of absence, the student should be continuing his
or her education where he or she left off.
Formal Policy
The statute provides that in order for a leave of absence not to be
treated as a withdrawal, the institution has to have a formal policy
regarding leaves of absence, the student has to follow the
institution's policy in requesting a leave of absence, and the
institution has to approve the student's request in accordance with the
institution's policy.
For documentation purposes, these proposed regulations would
further define a ``formal policy'' as one that requires a student to
provide a written, signed, and dated request for a leave of absence
prior to the leave of absence, unless unforeseen circumstances prevent
the student from doing so. The committee agreed that, in most cases, it
is possible to obtain a written request from a student prior to a leave
of absence. However, in some cases, a student will not be able to
provide a written, signed, and dated request prior to the beginning of
the leave of absence. For example, if a student was injured in a car
accident and needed a few weeks to recover before returning to school,
the student would not have been able to request the leave of absence in
advance. The regulations would permit the institution to grant the
leave of absence if the institution documents its decision and collects
the request from the student at a later date.
In addition, these proposed regulations would require that the
institution put the policy in writing and publicize it to students.
Because of the consequences of withdrawal, the committee agreed it is
essential to provide students with the information they need to request
and receive approval for an approved leave of absence. This requirement
would be met by including the policy with the one-time dissemination of
other consumer information under Sec. 668.41.
Section 668.22(e) Calculation of Amount of Title IV, HEA Program Funds
Earned by the Student
These proposed regulations would repeat (with minor changes for
clarity) the statutory language that delineates the calculation of the
amount of Title IV, HEA program funds earned, with the modifications
discussed below.
The most significant modification is the addition of language in
the calculation of the percentage earned to make clear that a student
in a clock hour program cannot earn 100 percent of his or her Title IV,
HEA program assistance unless the student actually completes more than
60 percent of the total clock hours in the payment period or period of
enrollment. This is addressed in detail in the discussion of the
percentage of the payment period or period of enrollment completed for
a clock hour program in Sec. 668.22(f).
Unearned Title IV Assistance To Be Returned
These proposed regulations would clarify the intent of the statute
by defining the ``total amount of unearned Title IV assistance to be
returned.'' The statute defines the percentage and amount of Title IV,
HEA program assistance that is unearned. The statute requires that the
unearned amount must be returned to the Title IV, HEA programs.
However, the statute defines the total amount unearned by applying the
percentage unearned to the total amount of program assistance that was
disbursed or that could have been disbursed.
Negotiators pointed out that in situations in which all the Title
IV, HEA program assistance that could have been disbursed was not
disbursed, the only amount that needs to be returned is the amount of
disbursed aid that exceeds the amount of earned aid. For example, a
student's total ``disburseable aid'' (aid that was disbursed or could
have been disbursed) is $3,250. It includes a $1,500 Pell Grant and
$1,750 in a subsidized Stafford loan. When the student withdraws, the
full amount of the loan ($1,750) has been disbursed, but only $1,000 of
the Pell Grant has been disbursed. The total Title IV, HEA
[[Page 43033]]
program assistance that is earned by the student is calculated by
multiplying total disburseable aid ($3,250) by the percentage earned.
Assuming a percentage earned of 25%, the total earned Title IV, HEA
program assistance would be $813 ($3,250 x 25%). If all the disbursable
aid had been disbursed, the total unearned amount of Title IV, HEA
program assistance of $2,437 ($3,250-$813) would have to be returned to
the Title IV, HEA programs. However, because only $1,000 of the $1,500
Pell Grant was actually disbursed, only $2,750 in Title IV, HEA program
assistance was actually disbursed, so only $1,937 would have to be
returned to the Title IV, HEA programs. This amount, $1,937, is the
amount actually disbursed that exceeds the amount of Title IV, HEA
program assistance that was earned by the student ($2,750-$813).
The committee agreed that replacing total unearned aid with the
total amount of unearned Title IV assistance to be returned clarifies
that the only amount that needs to be returned is the amount of aid
that was actually disbursed that exceeded the amount of earned aid.
Payment Period or Period of Enrollment
For students who withdraw from term-based educational programs,
this NPRM proposes that an institution would always have to determine
the treatment of the student's Title IV, HEA program assistance on a
payment period basis. For students who withdraw from a non-term based
educational program, the institution would have the choice of
determining the treatment of the student's Title IV, program assistance
on either a payment period basis or a period of enrollment basis. The
committee believed that allowing an institution a choice of a period
for non-term based educational programs only is consistent with the
conference report language for the 1998 Amendments. The conference
report states that the choice of using a period of enrollment, rather
than a payment period, was added ``to provide that the earned amount
may be the proportion of the period of enrollment at non-term based
institutions.'' The Department's negotiator stated in negotiated
rulemaking the Department's view that, generally, a payment period is
the most appropriate period for most educational programs, including
non-term based programs, because Title IV, HEA program funds are
disbursed on a payment period basis. However, the committee recognized
that in some cases, for an institution with non-term based programs, a
period of enrollment may be the most appropriate period.
This NPRM proposes that an institution would have to choose either
a payment period or period of enrollment for each non-term based
educational program and use that period consistently for all students
in the program. This provision is intended to prevent the potential for
abuse that could otherwise occur if a school were permitted to choose a
period on a student-by-student basis. If this were permitted, a payment
period could be used when it results in the most aid earned for the
students, but a period of enrollment could be used when that is the
period that maximizes the amount of aid earned. For example, absent
this provision, a school with a 900 clock hour program of two payment
periods of 450 clock hours could choose to use payment periods for
students who withdraw in the first payment period so that the point
beyond 60 percent of the period (the point at which a student would
earn 100 percent of his or her Title IV, HEA program assistance) occurs
at hour 271. However, the institution could then choose to use the
period of enrollment of 900 hours for all students who withdraw in the
second payment period, so that the point beyond 60 percent for those
students occurs at hour 541 of the program, rather than hour 721 (the
point beyond the 60 percent point for the second payment period of 450
hours plus the first payment period of 450 hours). This approach could
artificially inflate the amount of Title IV, HEA program assistance
that a student has earned upon withdrawal from the institution.
The Secretary believes that the regulations implementing section
484B of the HEA should provide for accurately determining when a
student ceased academic attendance and the corresponding amount of
Title IV, HEA program assistance earned; not maximize that assistance.
This approach requires that the same period be used for all students
who withdraw from the same program.
The Secretary specifically requests comment on how the calculation
of earned Title IV, HEA program assistance should be determined for
students who transfer-in or re-enter an institution. For example,
Matthew transfers into a 900 clock hour program. The payment periods
for the program are two periods of 450 clock hours. Because of transfer
credits, Matthew has only 300 hours to complete the program. Matthew
withdraws from the program on the same date as Thomas, who had been in
attendance since the beginning of the program. If the institution uses
payment periods for determining earned Title IV, HEA program funds,
what clock hours should be used to calculate Matthew's earned aid?
When discussing a non-term based institution's use of a period of
enrollment, some of the negotiators pointed out that it was not
possible to use the entire amount of Title IV, HEA program funds that
the student would receive for the period of enrollment in the
calculation if the withdrawal occurred during any payment period other
than the last payment period of the period of enrollment. This is
because Title IV, HEA program assistance that could have been disbursed
does not include assistance that the student was not otherwise eligible
to receive at the time he or she withdrew (the term ``could have been
disbursed'' is addressed in the discussion of Sec. 668.22(d)). If a
student does not begin attendance in a subsequent payment period, the
student is not eligible to receive Title IV, HEA program assistance for
that payment period. For example, if a student withdrew in the first of
two payment periods, the Title IV, HEA program assistance that the
student would have received for the second payment period would not be
included in the calculation of earned Title IV, HEA program assistance
because the student did not begin attendance in the second payment
period. Under these restrictions, the percentage of Title IV, HEA
program assistance earned would be based on the period of enrollment,
but that percentage would be applied only to the Title IV, HEA program
funds that were disbursed or that could have been disbursed for the
payment periods in which the student began attendance. The committee
discussed this issue and acknowledged that using the full period of
enrollment for determining the percentage of Title IV aid earned, but a
shorter period (payment period(s)) for calculating the amount of Title
IV aid that was disbursed or could have been disbursed, produces an
``apples and oranges'' situation and limits the desirability for an
institution to choose to use a period of enrollment when calculating
the amount of Title IV, HEA program assistance earned.
Some negotiators believed that the statute's use of aid ``awarded''
in some places allows an institution to use the amount awarded for the
entire period of enrollment in the determination of the earned amount
of Title IV, HEA program funds. The Department's negotiator pointed out
that the statutory language that delineates how earned Title IV, HEA
program assistance is calculated requires that the percentage earned be
applied to ``the total amount of such grant and loan assistance that
was
[[Page 43034]]
disbursed (and that could have been disbursed).'' As discussed above,
aid that ``could have been disbursed'' does not include assistance that
the student was not otherwise eligible to receive at the time of
withdrawal.
The committee also discussed how institutional charges incurred for
a payment period would be determined when the institution charges for a
longer period. This issue is addressed in the discussion of proposed
Sec. 668.22(f).
Section 668.22(f) Percentage of Payment Period or Period of Enrollment
Completed
The percentage of the payment period or period of enrollment
completed determines the percentage of aid earned by the student.
Credit Hour Programs
The statute defines the calculation of the percentage of the period
completed for a credit hour program as the number of calendar days
completed in the payment period or period of enrollment divided by the
total number of calendar days in the same period, as of the day the
student withdrew. The simplest approach would be to include all days in
the period in the total number of calendar days. However, the committee
agreed to exclude extended breaks when the institution had not
scheduled academic attendance for the student.
Accordingly, this NPRM proposes that the total number of calendar
days in a payment period or period of enrollment includes all days
within the period, except for scheduled breaks of at least five
consecutive days. Days in which the student was on an approved leave of
absence would also be excluded. Scheduled breaks of at least five
consecutive days and days in which a student was on an approved leave
of absence would be excluded from both the number of calendar days
completed in the payment period or period of enrollment (the
numerator), and from the total number of calendar days in the same
period (the denominator).
Clock Hour Programs
The statute provides two calculations for determining the
percentage of the period completed for a student who withdraws from a
clock hour program. The denominator, the total number of clock hours in
the payment period or period of enrollment, is the same for both
calculations. The numerator is the number of clock hours completed by
the student in that period as of the day the student withdrew, or, if
the clock hours completed are not less than a certain percentage, it is
the hours that were scheduled to be completed by the student in the
period. The statute specifies that this percentage is to be determined
by the Secretary in regulations.
The determination of this percentage was the subject of intense
negotiations by the committee. The NPRM is proposing to establish an
attendance threshold that will permit students who withdraw from clock
hour institutions to earn Title IV, HEA program funds based upon the
hours that were scheduled to be completed at the time they withdrew, so
long as the actual hours attended were at least 70 percent of the hours
that were scheduled to have been completed at the time they withdrew.
The Department's negotiator initially proposed that 90 percent be
the measure used to determine whether scheduled hours could be used.
Some negotiators argued for an alternative application of this portion
of the law, under which a student would be paid for all scheduled hours
at the time the student withdrew, provided that a specified minimum
percentage of the total hours in the program were completed. Some
negotiators described this measure as a type of ``cooling-off'' period
for a student because the student would be paid only for completed
hours during the early part of the payment period. For example, if the
threshold were 10 percent, any student completing at least 45 hours of
a 450 hour payment period would be paid for the hours scheduled to be
completed at the time the student withdrew.
The Department's negotiator pointed out that this proposal would
permit students with very low attendance rates to be paid a bonus for
the scheduled hours they had not attended simply because the student
managed to complete the relatively low number of hours during the time
the student was enrolled. A student completing the 10 percent minimum
number of hours would therefore continue earning Title IV, HEA program
funds without further class attendance until he or she withdrew or was
terminated by the institution. Some of the negotiators felt that this
was not likely to happen because satisfactory academic progress
requirements and accrediting agency oversight would limit the potential
for abuse. The committee used a workgroup to focus on these issues, and
the workgroup and committee reached agreement on the use of the 70
percent proposal.
Under this proposal, students who complete at least 70 percent of
their scheduled hours before they withdraw would earn Title IV, HEA
funds based upon their total scheduled hours for the time they were
enrolled, rather than the hours the student completed. However, only
students who actually completed more than 60 percent of the hours in
the payment period or period of enrollment would earn 100 percent of
the Title IV, HEA program funds. For example, if a student withdrew
after completing 230 hours in a 450 clock hour payment period, and the
student was scheduled to have completed 280 hours of the program at the
time he or she withdrew, that student would have completed 82 percent
of the scheduled hours (230/280) for the time he or she was enrolled.
In this case, the student met the attendance threshold of 70 percent
and, therefore, the institution would use the 280 scheduled hours,
rather than the 230 hours that were actually completed, in the
calculation of the percentage the period completed. If the same student
had completed 230 clock hours while he or she was scheduled to have
completed 335 hours at the point of withdrawal, the student's
attendance rate would have been less than 70 percent (230/335=69
percent) and only the 230 completed hours would be used in the
calculation.
The committee also considered an alternative proposal whereby the
point for earning all of the Title IV, HEA program assistance (that is,
the point beyond the 60 percent point) would have been based upon
scheduled clock hours rather than completed clock hours. This alternate
method was ultimately rejected by the committee because it would have
effectively lowered the threshold for earning 100 percent of the aid by
coupling it with the attendance percentage, and would have resulted in
a student being able to earn 100 percent of the Title IV, HEA program
assistance for a payment period or period of enrollment by exceeding as
little as 42 percent of the total hours (60 percent x 70 percent = 42
percent).
The proposal in the regulations reflects the determination that the
trigger for earning the last 40 percent of the Title IV, HEA program
funds for a payment period or period of enrollment should be tied to
the actual hours completed. In the example above in which the
institution determined that the student may be paid for 280 scheduled
hours in the 450 clock hour payment period, the percentage of the
payment period completed would be 62 percent (280/450), even though the
student actually completed only 51 percent of the total hours (230/
450). However, the student would not earn 100 percent of the Title IV,
HEA program funds because the 230 clock hours completed were less than
60 percent of the 450 clock hours in the
[[Page 43035]]
payment period, even though the 280 scheduled clock hours at the time
of withdrawal were above the 60 percent point. The student would earn
62 percent of the Title IV, HEA program funds that were disbursed or
that could have been disbursed.
The issue of whether excused absences should be counted as
completed hours was not discussed with the committee during the
negotiated rulemaking sessions. The Secretary believes that excused
absences should not be counted as completed hours. The Secretary
believes that the 70 percent scheduled to completed ratio measure is an
extremely tolerant threshold and no additional adjustments should be
made. The Secretary specifically requests comments on the treatment of
excused absences.
The Secretary specifically requests comments on whether the
proposed definitions of the percentage of the payment period or period
of enrollment completed create problems for non-term credit hour
programs, correspondence programs, or non-traditional programs.
Section 668.22(g) Responsibility of an Institution To Return Unearned
Title IV, HEA Program Funds
When there is an amount of Title IV, HEA program assistance to be
returned, the statute requires that the responsibility for the return
be shared by the institution and the student. The statute defines the
amount due from the institution as the lesser of the total unearned
amount of aid, or the institutional charges incurred by the student
multiplied by the percentage of unearned Title IV, HEA program
assistance.
The committee considered whether an institution should be allowed
to decide whether the institution or the student should return funds
first. Some negotiators believed that this would allow the institution
to minimize some students' immediate grant overpayment when a student
has unearned Title IV, HEA program funds that must be returned. They
also noted that many students will not have the immediate cash to repay
the grant overpayment and will be prevented from receiving additional
Title IV assistance if the students return to school. They further
noted that if the student was permitted to return Title IV, HEA program
funds before the institution, the student would be responsible for
returning funds to the loan, which he or she would pay back over time
in accordance with the promissory note, as specified in the statute.
The institution would pay off, or pay down, the student's grant
overpayment. These negotiators argued that a grant overpayment is more
of a hardship for a student because there is a more immediate demand
for repayment.
The Department's negotiator noted that the statute provides that
the student's responsibility is the amount of unearned Title IV, HEA
program funds minus the amount that the institution is required to
return. The Department's negotiator explained that the statute
therefore requires the student's repayment obligation to be determined
after the institution's share is calculated. The committee ultimately
agreed that the institution is required to return funds before the
student. As a result, because the institution will return loan funds
first, in some cases, a student must return grant funds in an
overpayment situation rather than paying back loans in accordance with
the terms of the promissory note. The Department believes this result
is also consistent with the law, because the 50 percent ``discount'' of
the grant repayment (discussed under Sec. 668.22(h)) is available only
to students and could not be used if the institution were required to
return excess grant funds.
Although the statute and these proposed regulations use the term
``return of funds,'' the committee also agreed that an institution was
not required to actually return its share before the student; rather,
the amount of assistance that the institution is responsible for
returning must be allocated between the Title IV, HEA program accounts
first.
Institutional Charges
On January 7, 1999, the Secretary published guidance on the
definition of institutional charges for the purpose of refund
calculations. This guidance was published in the form of a policy
bulletin on the Education Department's Information for Financial Aid
Professionals (IFAP) web site. The guidance was initially developed to
address requests for clarification of the definition of institutional
charges as used in the pre-1998 Amendments refund requirements.
Some of the negotiators noted that in the pre-1998 Amendments
requirements in section 484B of the HEA, refund provisions are used to
determine the portion of institutional charges that an institution must
return when a student withdraws. In the 1998 Amendments, institutional
charges are used only to determine the portion of unearned Title IV,
HEA program assistance that the institution is responsible for
returning. Institutional charges do not affect the amount of Title IV,
HEA program assistance that a student earns when he or she withdraws.
Some negotiators suggested that, because the impact of
institutional charges is different under the new law, the guidance on
the definition of institutional charges should be modified. The
Secretary agreed to revisit the current guidance to determine whether
revisions would be appropriate. Until further guidance is issued, the
guidance of the January 7, 1999, policy bulletin remains in effect.
As stated in the discussion of Sec. 668.22(e), for students who
withdraw from a non-term based educational program, the institution
would have the choice of determining the treatment of the student's
Title IV, HEA program assistance on either a payment period basis or a
period of enrollment basis. The committee also considered the situation
in which an institution chooses to calculate the treatment of Title IV,
HEA program assistance on a payment period basis for a non-term
program, but the institution charges for a period longer than the
payment period (most likely the period of enrollment) and there may not
be a specific amount that reflects the actual institutional charges
incurred by the student for the payment period.
These proposed regulations would address this issue by defining the
institutional charges incurred by the student for the payment period
when the student is charged for a period that is longer than the
payment period. In general, a pro-rated amount of institutional charges
for the longer period would most accurately reflect the charges
incurred by the student for the payment period. However, the committee
agreed that if an institution has retained Title IV, HEA program funds
in excess of the pro-rated amount to cover institutional charges, then
those charges are attributable to the payment period and are a better
indicator of the student's incurred institutional charges. For example,
institutional charges are $8,000 for a non-term based program that
spans two payment periods of 450 clock hours each. The institution
chooses to calculate the treatment of Title IV, HEA program funds on a
payment period basis. A student withdraws in the first payment period.
The pro-rated amount of institutional charges for each payment period
is $4,000. However, the institution has retained $5,000 of the Title
IV, HEA program funds for institutional charges for the payment period.
Therefore, the institutional charges for the payment period are $5,000.
Several negotiators asked the Department to clarify the meaning of
the
[[Page 43036]]
phrase, ``institutional charges incurred by the student.'' For purposes
of this section, ``institutional charges incurred by the student''
would be charges for which the student was responsible that were
initially assessed by the institution for the payment period or period
of enrollment.
Section 668.22(h) Responsibility of a Student To Return Unearned Title
IV, HEA Program Funds
The statute specifies that the student is responsible for all
unearned Title IV, HEA program assistance that the institution is not
required to return. Although this NPRM proposes that an institution
must pay back any amount due to a Title IV loan program within the
timeframe established in paragraph (j), the statute allows a student to
pay back his or her portion of any unearned loan funds in accordance
with the terms of the promissory note. In other words, the student will
be repaying any unearned loan funds in the same manner that he or she
will be repaying earned loan funds. These proposed regulations would
not require the student to provide any additional assurances or
affirmations.
The statute states that a student's unearned grant funds are an
overpayment and are subject to repayment arrangements satisfactory to
the institution or overpayment collection procedures prescribed by the
Secretary. The negotiators reached consensus that these proposed
regulations would apply the current regulatory requirements and
corresponding sub-regulatory guidance for the collection of Federal
Pell Grant and FSEOG overpayments for this purpose. Additional
subregulatory guidance may be issued if further clarification is needed
when institutions start applying these existing regulations in the
return of funds context. Any future changes to these requirements will
be made by proposing changes to the Federal Pell Grant and FSEOG
regulations in accordance with applicable requirements of the
Administrative Procedures Act.
Fifty Percent Discount
Section 484B(b)(2)(C) of the HEA states, ``a student shall not be
required to return 50 percent of the grant assistance received by the
student under this title, for a payment period or period of enrollment,
that is the responsibility of the student to repay under this
section.''
The implementation of this provision was the subject of extensive
discussion among the negotiators. Because the difference between the
Department's interpretation of the statute and most of the other
negotiators' interpretation of the statute was so great, the committee
agreed to exclude this provision from the call for consensus on the
draft regulations. Because no consensus was reached on this issue, the
proposed regulatory provision on this issue reflects the Secretary's
view.
The Secretary interprets the statute to provide that a student does
not have to repay 50 percent of the student's grant repayment amount.
The Secretary believes that 50 percent of the student's grant repayment
amount provides the level of relief to the student that the statute
intended, while it requires a student to return a portion of the
unearned grant assistance.
Some negotiators felt that the statute provided a student with a
higher level of relief. These negotiators read the statute to relieve
the student of 50 percent of the amount of grant funds that were
originally disbursed or that could have been disbursed to the student.
The Secretary did not agree with the negotiators' reading of the
statute because he believes that it is inconsistent with the conference
report for the 1998 Amendments which states that this statutory
provision was added to ``[reduce] by half the amount of unearned grant
assistance the student is responsible for returning.''
The following example illustrates the Secretary's interpretation of
the statute. When Amanda withdrew, the amount of Title IV assistance
that was disbursed or that could have been disbursed was $1,000 in
Federal Pell Grant funds. Total Title IV funds to be returned is $750.
The institution is responsible for returning $300 to the Federal Pell
Grant. Amanda is responsible for returning the balance of the unearned
funds, which is $450. However, because Amanda must return these funds
to a Title IV grant program, she is not required to return 50 percent
of the grant assistance received that it is her responsibility to
repay. Under the Secretary's proposal, Amanda would have to repay $225
to the Federal Pell Grant program (50 percent of the amount that she is
initially required to repay [$450]).
If the interpretation supported by several of the negotiators was
used, Amanda's repayment amount would be ``discounted'' by 50 percent
of the amount of Pell Grant funds that was disbursed or that could have
been disbursed, 50 percent of $1,000, which is $500. Because this
discount exceeds the initial amount that Amanda is required to repay
($450), she would not have to return any funds to the Federal Pell
Grant program.
Section 668.22(i) Order of Return of Title IV, HEA Program Funds
The statute specifies by program the order in which an institution
and a student must return Title IV, HEA program funds. Unearned Title
IV, HEA program assistance is returned first to the Title IV loan
programs (first to unsubsidized loans, then subsidized, Federal
Perkins, and PLUS), and then to the Title IV grant programs. This
provision continues the approach of the pre-1998 Amendments
requirements of section 485(a) of the HEA that a student's Title IV
loan debt should be reduced first when returning funds to the Title IV,
HEA programs when a student withdraws.
Section 668.22(j) Timeframe for the Return of Title IV, HEA Program
Funds.
The statute does not specify a timeframe for the return of Title
IV, HEA program funds. However, the committee agreed that such a
timeframe should be specified in the regulations. This NPRM proposes
that an institution have 30 days from the date that the institution
determines that the student withdrew to return all unearned funds for
which it is responsible. Under the existing refund regulations, an
institution must return Title IV funds within 30 days for all Title IV,
HEA program funds except for most FFEL program funds, which must be
returned within 60 days. The committee agreed that it is reasonable to
expect institutions to return all Title IV, HEA program funds,
including all FFEL funds, within 30 days because most FFEL funds are
now delivered electronically.
These proposed regulations would set a timeframe for an institution
to determine the withdrawal date for a student who withdrew without
providing notification to the institution. An institution would have 30
days from the earlier of (1) the end of the payment period or period of
enrollment as, applicable, (2) the end of the academic year, or (3) the
end of the student's educational program. These proposed regulations
would mirror the provisions of the current Sec. 668.22 to recognize
that some institutions may not know about drop-outs until the
institution checks its records at the end of an academic period.
However, the committee agreed that a timeframe is necessary so that
unearned funds will be returned within a reasonable period of time.
Section 668.22(k) Consumer Information
The 1998 Amendments made modifications to section 485(a)(F) of the
[[Page 43037]]
HEA to address the changes to section 484B. Section 485(a)(F) describes
the consumer information that an institution must provide to its
students regarding the requirements of section 484B, any refund
policies that the institution uses, and the requirements for officially
withdrawing from the institution. The proposed regulations implementing
section 485(a)(F) are included in a separate NPRM proposing changes to
Subpart D-Institutional and Financial Assistance Information for
Students of the Student Assistance General Provisions. These proposed
regulations for Sec. 668.22 would cross-reference the regulations for
Subpart D.
Section 668.22(l) Definitions
Aid That Could Have Been Disbursed
The statute requires an institution to calculate the amount of
earned Title IV, HEA program funds by applying a percentage to the
total amount of Title IV, HEA program assistance that was disbursed, or
that could have been disbursed. The committee agreed that the term
``could have been disbursed'' should be defined in the regulations. The
amount of Title IV, HEA program funds that could have been disbursed
does not include Title IV, HEA program funds that the student was not
otherwise eligible to receive at the time he or she withdrew. For
example, a first-year, first-time borrower who withdraws before the
30th day of the student's program of study would not have been eligible
to receive any FFEL or Direct Loan funds at the time he or she withdrew
(unless the institution is exempt from the ``30-day delay'' provisions
in section 428G of the HEA). Therefore, for this student, no amount of
an FFEL or Direct Loan may be included in the calculation of the
treatment of Title IV, HEA program assistance.
The committee agreed that the amount of Title IV, HEA program funds
that could have been disbursed would not include second or subsequent
disbursements of FFEL or Direct loans that are prohibited under
Sec. 668.164(g)(2)(ii). Section 668.164(g)(2)(ii) prohibits late second
or subsequent disbursements of FFEL or Direct Loan funds unless the
student has graduated or successfully completed the period of
enrollment for which the loan was intended.
In addition, the committee agreed that Title IV, HEA program funds
that could have been disbursed would not include a second disbursement
of a Title IV, HEA FFEL or Direct loan that is prohibited under
Sec. 682.604(c)(7) or (8) or Sec. 685.301(b)(5) or (6). These sections
provide that an institution may not make a second disbursement of a
loan for attendance in a clock hour or non-standard term credit hour
educational program until the later of the calendar midpoint of the
loan period or the date that the student has completed half of the
academic coursework or clock hours (as applicable) in the loan period.
The committee agreed that Title IV, HEA program funds would also
not include subsequent disbursements of Federal Pell Grant funds that
are prohibited under Sec. 690.75(a). Section 690.75(a) prohibits
subsequent disbursements of Federal Pell Grant funds for attendance in
a clock hour or non-term credit hour program until the student has
completed the required clock hours or credit hours for which he or she
has already been paid a Federal Pell Grant.
Period of Enrollment
For consistency, the committee agreed that the term ``period of
enrollment'' should be defined in the same manner as the term is
defined for the FFEL and Direct Loan programs in Sec. 682.200(b) and
Sec. 685.102.
Date of the Institution's Determination That the Student Withdrew
As noted in the discussion of the determination of a student's
withdrawal date, some aspects of the withdrawal process cannot occur
until the institution is aware that the student has withdrawn. For
example, an institution cannot be expected to return Title IV funds for
a withdrawn student unless the institution knows that the student is no
longer in attendance. This NPRM proposes to define the ``date of the
institution's determination that the student withdrew'' for all
possible types of withdrawals. As noted previously, the ``date of the
institution's determination that the student withdrew'' is not
necessarily the same as a student's withdrawal date. The proposed
definition of withdrawal date in Sec. 668.22(b) and (c) is for purposes
of determining the percentage of the payment period or period of
enrollment completed and thus the amount of aid a student has earned.
The ``date of the institution's determination that the student
withdrew'' is the date that is used to determine the amount of Title IV
aid that has been disbursed. The amount of Title IV assistance that had
been earned is subtracted from the amount disbursed or could have been
disbursed in order to determine the amount of Title IV assistance that
is to be returned. The ``date of the institution's determination that
the student withdrew'' is also the date that ``starts the clock'' for
the return of the Title IV, HEA program funds by the institution.
For a student who provided notification of his or her withdrawal,
the date of the institution's determination that the student withdrew
would be the later of the student's withdrawal date or the date of
notification of withdrawal. For a student who did not provide
notification of his of her withdrawal, this date would be the date that
the institution becomes aware that the student has ceased attendance.
For a student who does not return from an approved leave of absence,
this date would be the earlier of the date of the expiration of the
leave of absence or the date the student notifies the institution that
he or she will not be returning. For a student who rescinds his or her
intent to withdraw, but does not complete the payment period or period
of enrollment, this date would be the date the institution becomes
aware that the student did not, or will not, complete the payment
period or period of enrollment. (These withdrawal situations are
addressed in the discussions of Secs. 668.22(b) and (c)). The committee
believes that this proposed definition of the date of the institution's
determination that the student withdrew captures the point when an
institution could reasonably be expected to know that a student has
ceased attendance.
Section 682.207 Due Diligence in Disbursing a Loan
Foreign institutions that participate in the Title IV, HEA programs
are also subject to the requirements of section 484B of the HEA for the
treatment of Title IV, HEA program funds when a student withdraws.
However, the statute allows lenders to make FFEL program loan
disbursements directly to a student who is attending a foreign school.
As a result, a foreign school may not know if an FFEL program loan has
been disbursed to a student. These proposed regulations would require a
lender making a direct disbursement to a student attending a foreign
school to notify the foreign school that the disbursement was made.
These proposed regulations also would require that the notification
provide the information necessary for the institution to determine the
amount of Title IV, HEA program funds that the student has earned if
the student withdraws.
Executive Order 12866
1. Potential Costs and Benefits
Under Executive Order 12866, we have assessed the potential costs
and benefits of this regulatory action.
[[Page 43038]]
The potential costs associated with the proposed regulations are
those resulting from statutory requirements and those we have
determined as necessary for administering this program 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 resultant
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.
* The Secretary invites comments on how to make these
proposed regulations easier to understand, including answers to
questions such as the following:
* 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. 668.22 Treatment of Title IV funds when a student withdraws.)
* 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
ADDRESS section of the preamble.
Regulatory Flexibility Act Certification
The Secretary certifies 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 and individual
recipients of Title IV, HEA program funds. 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. Individuals are not considered
small entities for this purpose. These proposed regulations would not
have a significant economic impact on small institutions. These
proposed regulations would incorporate clarifying definitions and
provisions, and institute timeframes consistent, to the maximum extent
possible, with existing program rules, for the most practical and
uniform implementation of the new statutory requirements for the return
of Title IV aid when a student withdraws.
These proposed regulations would specify when FSEOG program funds
must be included in the calculation of the amount of title IV, HEA
program assistance earned by a student as of the time he or she ceases
enrollment. The regulations would define ``the date of the
institution's determination that the student withdrew'' to simplify the
institution's calculation of total aid disbursed. To minimize
administrative burden, these regulations would adopt late disbursement
procedures fundamentally consistent with current Cash Management rules
when a student is determined to have earned more title IV, HEA program
assistance than had been disbursed at the time the institution
determines the student withdrew. These regulations would also provide
flexibility in the granting of approved leaves of absence for
exceptional circumstances, for military service, and for circumstances
covered by the Family and Medical Leave Act of 1993.
The proposed regulations would enable the Secretary to better
safeguard the Federal fiscal interest and the interests of students
without imposing administrative burden or having a significant economic
impact on small institutions.
The Secretary invites comments from small institutions as to
whether the proposed changes would have a significant economic impact
on them.
Paperwork Reduction Act of 1995
Sections 668.22 and 682.207 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
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 collection(s) of
information in--
* Deciding whether the proposed collection(s) is [are]
necessary for the proper performance of the functions, including
whether the information will have practical use;
* Evaluating the accuracy of our estimate of the burden of
the proposed collection(s), including the validity of the 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 collection 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.
[[Page 43039]]
Intergovernmental Review
The campus-based programs (Federal Perkins Loan, Federal Work-Study
(FWS), and Federal Supplemental Opportunity Grant (FSEOG) programs),
the William D. Ford Federal Direct Loan (Direct Loan) Program, the
Federal Family Education Loan (FFEL) programs, the Federal Pell Grant
Program, and the LEAP Program 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 in this document would require transmission of
information that is being gathered by or is available from any other
agency or authority of the United States gathers or makes available.
Electronic Access to This Document
You may view this document 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 first of 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, DC, 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: 84.007 Federal
Supplemental Educational Opportunity Grant Program; 84.032
Consolidation Program; 84.032 Federal Stafford Loan Program; 84.032
Federal PLUS Program; 84.032 Federal Supplemental Loans for Students
Program; 84.033 Federal Work-Study Program; 84.038 Federal Perkins
Loan Program; 84.063 Federal Pell Grant Program; 84.069 LEAP; 84.268
William D. Ford Federal Direct Loan Programs; and 84.272 National
Early Intervention Scholarship and Partnership Program)
List of Subjects in 34 CFR parts 668 and 682
Administrative practice and procedure, Colleges and universities,
Student aid, Reporting and recordkeeping requirements, education, Loan
programs--education, vocational education.
Dated: August 3, 1999.
Richard W. Riley,
Secretary of Education.
The Secretary proposes to amend parts 668 and 682 of title 34 of
the Code of Federal Regulations as follows:
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS
1. The authority citation for part 668 is revised to read as
follows:
Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1088, 1091, 1092,
1094, 1099c-1, unless otherwise noted.
2. Section 668.22 is revised to read as follows:
Sec. 668.22 Treatment of title IV funds when a student withdraws.
(a) General. (1) When a recipient of title IV grant or loan
assistance withdraws from an institution during a payment period or
period of enrollment in which the recipient began attendance, the
institution must determine the amount of title IV grant or loan
assistance (not including Federal Work-Study or the non-Federal share
of FSEOG awards when an institution meets its matching share by the
individual recipient method or the aggregate method) that the student
earned as of the student's withdrawal date in accordance with paragraph
(e) of this section.
(2) If the amount of title IV grant and/or loan assistance that the
student earned as calculated under paragraph (e)(1) of this section is
less than the amount of title IV grant or loan assistance that was
disbursed to the student or on behalf of the student in the case of a
PLUS loan, as of the date of the institution's determination that the
student withdrew--
(i) The difference between these amounts must be returned to the
title IV programs in accordance with paragraphs (g) and (h) of this
section in the order specified in paragraph (i) of this section; and
(ii) No additional disbursements may be made to the student for the
payment period or period of enrollment.
(3) If the amount of title IV grant or loan assistance that the
student earned as calculated under paragraph (e)(1) of this section is
greater than the amount of title IV grant or loan assistance that was
disbursed to the student or on behalf of the student in the case of a
PLUS loan, as of the date of the institution's determination that the
student withdrew, the difference between these amounts must be treated
as a late disbursement in accordance with paragraph (a)(4) of this
section and Sec. 668.164(g)(2).
(4)(i)(A) If outstanding current charges exist on the student's
account, the institution may credit the student's account in accordance
with Sec. 668.164(d)(1), (d)(2)(i), and (d)(3) with all or a portion of
the late disbursement described in paragraph (a)(3) of this section, up
to the amount of the outstanding charges.
(B) If Direct Loan, FFEL, or Federal Perkins Loan Program funds are
used to credit the student's account, the institution must notify the
student, or parent in the case of a PLUS loan, and provide an
opportunity for the borrower to cancel all or a portion of the loan, in
accordance with Sec. 668.165(a)(2), (a)(3), (a)(4) and (a)(5).
(ii)(A) The institution must offer any amount of a late
disbursement that is not credited to the student's account in
accordance with paragraph (a)(4)(i) of this section to the student, or
the parent in the case of a PLUS loan, within 30 days of the date of
the institution's determination that the student withdrew, as defined
in paragraph (l)(3) of this section, by providing a written
notification to the student, or parent in the case of PLUS loan funds.
The written notification must--
(1) Identify the type and amount of the title IV funds that make up
the late disbursement that is not credited to the student's account in
accordance with paragraph (a)(4)(i) of this section;
(2) Explain the ability of the student or parent to accept or
decline some or all of the late disbursement that is not credited to
the student's account in accordance with paragraph (a)(4)(i) of this
section; and
(3) Advise the student or parent that no late disbursement will be
made to the student or parent if the student or parent does not respond
within 14 days of the date that the institution sent the notification,
unless the institution chooses to make a late disbursement in
accordance with paragraph (a)(4)(ii)(D) of this section.
(B) If the student or parent submits a timely response that
instructs the institution to make all or a portion of the late
disbursement, the institution must disburse the funds in the manner
specified by the student or parent within 90 days of the date of the
institution's determination that the student withdrew, as defined in
paragraph (l)(3) of this section.
(C) If the student or parent does not respond to the institution's
notice, no portion of the late disbursement that is not credited to the
student's account in
[[Page 43040]]
accordance with paragraph (a)(4)(i) of this section may be disbursed.
(D) If a student or parent submits a late response to the
institution's notice, the institution may make the late disbursement as
instructed by the student or parent or decline to do so in accordance
with applicable program regulations.
(E) An institution must inform a student or parent electronically
or in writing concerning the outcome of any late disbursement request.
(iii) A late disbursement must be made from available grant funds
before available loan funds.
(b) Withdrawal date for a student who withdraws from an institution
that is required to take attendance. (1) For purposes of this section,
for a student who ceases attendance or for a student who does not
return from an approved leave of absence, as defined in paragraph (d)
of this section, at an institution that is required to take attendance,
the student's withdrawal date is the last date of academic attendance
as determined by the institution from its attendance records.
(2) An institution must document a student's withdrawal date
determined in accordance with paragraph (b)(1) of this section and
maintain the documentation as of the date of the institution's
determination that the student withdrew, as defined in paragraph (l)(3)
of this section.
(3) An institution is ``required to take attendance'' if the
institution is required to take attendance by an entity outside of the
institution (such as the institution's accrediting agency or state
agency).
(c) Withdrawal date for a student who withdraws from an institution
that is not required to take attendance. (1) For purposes of this
section, for a student who ceases attendance at an institution that is
not required to take attendance, the student's withdrawal date is--
(i) The date, as determined by the institution, that the student
began the withdrawal process prescribed by the institution;
(ii) The date, as determined by the institution, that the student
otherwise provided official notification to the institution of his or
her intent to withdraw;
(iii) If the student ceases attendance without providing official
notification to the institution of his or her withdrawal in accordance
with paragraph (c)(1)(i) or (c)(1)(ii) of this section, the mid-point
of the payment period (or period of enrollment, if applicable);
(iv) If the institution determines that a student did not begin the
institution's withdrawal process or otherwise provide official
notification (including notice from an individual acting on the
student's behalf) to the institution of his or her intent to withdraw
because of illness, accident, grievous personal loss, or other such
circumstances beyond the student's control, the date that the
institution determines is related to such circumstance; or
(v) If a student does not return from an approved leave of absence
as defined in paragraph (d) of this section, the date that the
institution determines the student began the leave of absence.
(2)(i)(A) An institution may allow a student to rescind his or her
official notification to withdraw under paragraph (c)(1)(i) or (ii) by
filing a written statement that he or she is continuing to participate
in academically-related activities and intends to complete the payment
period or period of enrollment.
(B) If the student subsequently ceases to attend the institution
prior to the end of the payment period or period of enrollment, the
student's rescission is negated and the withdrawal date is the
student's original date under paragraph (c)(1)(i) or (ii), unless a
later date is determined under paragraph (c)(3).
(ii) If a student both begins the withdrawal process prescribed by
the institution and otherwise provides official notification of his or
her intent to withdraw in accordance with paragraphs (c)(1)(i) and
(c)(1)(ii) of this section respectively, the student's withdrawal date
is the earlier date unless a later date is determined under paragraph
(c)(3) of this section.
(3)(i) Notwithstanding paragraphs (c)(1) and (2) of this section,
an institution that is not required to take attendance may use as the
student's withdrawal date a student's last date of attendance at an
academically-related activity as documented by the institution.
(ii) An ``academically-related activity'' is one that has been
confirmed by an employee of the school (such as an exam, a tutorial,
computer-assisted instruction, academic counseling, academic
advisement, turning in a class assignment or attending a study group
that is assigned by the institution);
(4) An institution must document a student's withdrawal date
determined in accordance with paragraph (c)(1), (2), and (3) of this
section and maintain the documentation as of the date of the
institution's determination that the student withdrew, as defined in
paragraph (l)(3) of this section.
(5)(i) ``Official notification to the institution'' is a notice of
intent to withdraw that a student provides to an office designated by
the institution.
(ii) An institution must designate one or more offices at the
institution that a student may readily contact to provide official
notification of withdrawal.
(d) Approved Leave of Absence. (1) For purposes of this section, an
institution does not have to treat a leave of absence as a withdrawal
if it is an approved leave of absence. A leave of absence is an
approved leave of absence if--
(i) It is the only leave of absence granted to the student in a 12-
month period;
(ii) The leave of absence does not exceed 180 days in any 12-month
period;
(iii) The institution has a formal policy regarding leaves of
absence;
(iv) The student followed the institution's policy in requesting
the leave of absence;
(v) The institution determines that there is a reasonable
expectation that the student will be able to return to the school;
(vi) The institution approved the student's request in accordance
with the institution's policy;
(vii) The leave of absence does not involve additional charges by
the institution; and
(viii) Upon the student's return from the leave of absence, the
student is permitted to complete the coursework he or she began prior
to the leave of absence.
(2) Notwithstanding paragraph (d)(1)(i), an institution may treat
subsequent leaves of absence as approved leaves of absence if the
institution documents that the leaves of absence are granted for
military reasons or circumstances covered under the Family and Medical
Leave Act of 1993.
(3) If a student does not resume attendance at the institution on
or before the expiration of a leave of absence that meets the
requirements of paragraph (d)(1) of this section, the institution must
treat the student as a withdrawal in accordance with the requirements
of this section.
(4) For purposes of this paragraph--
(i) The number of days in a leave of absence are counted beginning
with the first day of the student's leave of absence.
(ii) A ``12-month period'' begins on the first day of the student's
leave of absence.
(iii) An institution's leave of absence policy is a ``formal
policy'' if the policy--
(A) Is in writing and publicized to students; and
(B) Requires students to provide a written, signed, and dated
request for a leave of absence prior to the leave of
[[Page 43041]]
absence. However, if unforeseen circumstances prevent a student from
providing a prior written request, the institution may grant the
student's request for a leave of absence, provided that the institution
documents its decision and collects the request at a later date.
(e) Calculation of the Amount of title IV assistance earned by the
student.
(1) General. The amount of title IV grant or loan assistance that
is earned by the recipient is calculated by--
(i) Determining the percentage of title IV grant or loan assistance
that has been earned by the student, as described in paragraph (e)(2)
of this section; and
(ii) Applying this percentage to the total amount of title IV grant
or loan assistance that was disbursed (and that could have been
disbursed, as defined in paragraph (l)(1) of this section) to the
student, or on the student's behalf, for the payment period or period
of enrollment as of the student's withdrawal date.
(2) Percentage earned. The percentage of title IV grant or loan
assistance that has been earned by the student is--
(i) Equal to the percentage of the payment period or period of
enrollment that the student completed (as determined in accordance with
paragraph (f) of this section) as of the student's withdrawal date, if
this date occurs on or before completion of 60 percent of the--
(A) Payment period or period of enrollment for a program that is
measured in credit hours, or
(B) Clock hours completed during the payment period or period of
enrollment for a program that is measured in clock hours; or
(ii) 100 percent, if the student's withdrawal date occurs after
completion of 60 percent of the--
(A) Payment period or period of enrollment for a program that is
measured in credit hours, or
(B) Clock hours completed during the payment period or period of
enrollment for a program measured in clock hours.
(3) Percentage unearned. The percentage of title IV grant or loan
assistance that has not been earned by the student is calculated by
determining the complement of the percentage of title IV grant or loan
assistance earned by the student as described in paragraph (e)(2) of
this section.
(4) Total Amount of Unearned title IV Assistance to be Returned.
The unearned amount of title IV assistance to be returned is calculated
by subtracting the amount of title IV assistance earned by the student
as calculated under paragraph (e)(1) of this section from the amount of
title IV aid that was disbursed to the student as of the date of the
institution's determination that the student withdrew.
(5) Use of payment period or period of enrollment. (i) The
treatment of title IV grant or loan funds when a student withdraws must
be determined on a payment period basis for a student who attended a
term-based educational program.
(ii)(A) The treatment of title IV grant or loan funds when a
student withdraws may be determined on either a payment period basis or
a period of enrollment basis for a student who attended a non-term
based educational program.
(B) An institution must consistently use either a payment period or
period of enrollment for all purposes of this section for all students
who withdraw from the same non-term based education program.
(f) Percentage of Payment Period or Period of Enrollment Completed.
(1) For purposes of paragraph (e)(2)(i) of this section, the percentage
of the payment period or period of enrollment completed is determined--
(i) In the case of a program that is measured in credit hours, by
dividing the total number of calendar days in the payment period or
period of enrollment into the number of calendar days completed in that
period as of the student's withdrawal date; and
(ii) In the case of a program that is measured in clock hours, by
dividing the total number of clock hours in the payment period or
period of enrollment into the number of clock hours--
(A) Completed by the student in that period as of the student's
withdrawal date; or
(B) Scheduled to be completed as of the student's withdrawal date,
if the clock hours completed in the period are not less than 70 percent
of the hours that were scheduled to be completed by the student as of
the student's withdrawal date.
(2)(i) The total number of calendar days in a payment period or
period of enrollment includes all days within the period except for
scheduled breaks of at least five consecutive days.
(ii) The total number of calendar days in a payment period or
period of enrollment does not include days in which the student was on
an approved leave of absence.
(g) Return of Unearned Aid, Responsibility of the Institution. (1)
The institution must return, in the order specified in paragraph (i) of
this section, the lesser of--
(i) The total amount of unearned title IV assistance to be returned
as calculated under paragraph (e)(4) of this section; or
(ii) An amount equal to the total institutional charges incurred by
the student for the payment period or period of enrollment multiplied
by the percentage of title IV grant or loan assistance that has not
been earned by the student, as described in paragraph (e)(3) of this
section.
(2) For purposes of this section, ``institutional charges'' are
tuition, fees, room and board (if the student contracts with the
institution for the room and board) and other educationally-related
expenses assessed by the institution.
(3) If, for a non-term program an institution chooses to calculate
the treatment of title IV assistance on a payment period basis, but the
institution charges for a period that is longer than the payment
period, ``total institutional charges incurred by the student for the
payment period'' is the greater of--
(i) The pro rated amount of institutional charges for the longer
period; or
(ii) The amount of title IV assistance retained for institutional
charges as of the student's withdrawal date.
(h) Return of Unearned Aid, Responsibility of the Student. (1)
After the institution has returned the unearned funds for which it is
responsible in accordance with paragraph (g) of this section, the
student must return assistance for which the student is responsible in
the order specified in paragraph (i) of this section.
(2) The amount of assistance that the student is responsible for
returning is calculated by subtracting the amount of unearned aid that
the institution is required to return under paragraph (g) of this
section from the total amount of unearned title IV assistance to be
returned under paragraph (e)(4) of this section.
(3) The student (or parent in the case of funds due to a PLUS Loan)
must return or repay, as appropriate, the amount determined under
paragraph (h)(1) of this section to--
(i) Any title IV loan program in accordance with the terms of the
loan; and
(ii) Any title IV grant program as an overpayment of the grant;
however, a student is not required to return 50 percent of the grant
assistance received by the student for a payment period or period of
enrollment that is the responsibility of the student to repay under
this section.
(4)(i) An overpayment must be repaid to the institution or to the
title IV, HEA programs and is subject to--
[[Page 43042]]
(A) Repayment arrangements satisfactory to the institution; or
(B) Overpayment collection procedures prescribed by the Secretary.
(ii) An institution must make reasonable efforts to contact the
student and recover the overpayment in accordance with program
regulations (34 CFR 673.5 for Federal SEOG funds and 34 CFR 690.79 for
Federal Pell Grant funds).
(i) Order of Return of title IV funds. (1) Loans. Unearned funds
returned by the institution or the student, as appropriate, in
accordance with paragraphs (g) or (h) of this section respectively,
must be credited to outstanding balances on title IV loans made to the
student or on behalf of the student for the payment period or period of
enrollment for which a return of funds is required. Such funds shall be
credited to outstanding balances for the payment period or period of
enrollment for which a return of funds is required in the following
order:
(i) Unsubsidized Federal Stafford loans.
(ii) Subsidized Federal Stafford loans.
(iii) Unsubsidized Federal Direct Stafford loans.
(iv) Subsidized Federal Direct Stafford loans.
(v) Federal Perkins loans.
(vi) Federal PLUS loans received on behalf of the student.
(vii) Federal Direct PLUS received on behalf of the student.
(2) Remaining funds. If unearned funds remain to be returned after
repayment of all outstanding loan amounts, the remaining excess shall
be credited to any amount awarded for the payment period or period of
enrollment for which a return of funds is required in the following
order:
(i) Federal Pell Grants.
(ii) Federal SEOG Program aid.
(iii) Other grant or loan assistance authorized by title IV of the
HEA.
(j) Timeframe for the return of title IV funds. (1) An institution
must return the amount of title IV funds for which it is responsible
under paragraph (g) of this section as soon as possible but no later
than 30 days after the date that the institution determines that the
student withdrew as defined in paragraph (l)(3) of this section.
(2) An institution must determine the withdrawal date for a student
who withdraws without providing notification to the institution no
later than 30 days after the expiration of the earlier of the--
(i) Payment period or period of enrollment;
(ii) Academic year in which the student withdrew; or
(iii) Educational program from which the student withdrew.
(k) Consumer Information. An institution must provide students with
information about the requirements of this section in accordance with
Sec. 668.44.
(l) Definitions. For purposes of this section--
(1) Title IV grant or loan funds that ``could have been disbursed''
are determined in accordance with the late disbursement provisions in
Sec. 668.164(g).
(2) A ``period of enrollment'' is the academic period established
by the institution for which institutional charges are generally
assessed (i.e. length of the student's program or academic year).
(3) The ``date of the institution's determination that the student
withdrew'' is--
(i) For a student who provided notification to the institution of
his or her withdrawal, the student's withdrawal date as determined
under paragraph (c) of this section or the date of notification of
withdrawal, whichever is later;
(ii) For a student who did not provide notification of his of her
withdrawal to the institution, the date that the institution becomes
aware that the student ceased attendance;
(iii) For a student who does not return from an approved leave of
absence, the earlier of the date of the expiration of the leave of
absence or the date the student notifies the institution that he or she
will not be returning to the institution; or
(iv) For a student whose rescission is negated under paragraph
(c)(2)(i)(B) of this section, the date the institution becomes aware
that the student did not, or will not, complete the payment period or
period of enrollment.
(Authority: 20 U.S.C. 1091b)
PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM
3. The authority citation for part 682 continues to read as
follows:
Authority: 20 U.S.C. 1071, to 1087-2, unless otherwise noted.
4. Section 682.207 is amended by adding a new paragraph
(b)(1)(v)(E) to read as follows:
Sec. 682.207 Due diligence in disbursing a loan.
* * * * *
(b) * * *
(1) * * *
(v) * * *
(E) If a lender disburses a loan directly to the borrower for
attendance at an eligible foreign school, as provided in paragraph
(b)(1)(v)(D)(1) of this section, the lender must, at the time of
disbursement, notify the school of--
(1) The name and social security number of the student;
(2) The name of the parent borrower, if the loan disbursed is a
PLUS loan;
(3) The type of loan;
(4) The amount of the disbursement, including the amount of any
fees assessed the borrower;
(5) The date of the disbursement; and
(6) The name, address, telephone and fax number or electronic
address of the lender, servicer, or guaranty agency to which any
inquiries should be addressed.
[FR Doc. 99-20352 Filed 8-5-99; 8:45 am]
BILLING CODE 4000-01-U