[Federal Register: September 17, 1996 (Volume 61, Number 181)]
[Rules and Regulations]               
[Page 49041-49043]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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Part VI

Department of Education


34 CFR Part 668

Student Assistance General Provisions;

Final Rule

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34 CFR Part 668

Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Final regulations.


SUMMARY: The Secretary amends the Student Assistance General Provisions 
regulations. These technical amendments are necessary to clarify the 
regulations and to remove the procedural requirement that recipient 
institutions include in any request for funds the Catalog of Federal 
Domestic Assistance (CFDA) number identifying the source of the funds 
and the amount of funds sought for each program included in the 
request. The Secretary takes action to defer this change in light of 
the information technology currently available to recipient 
institutions and the Department.

EFFECTIVE DATE: These regulations take effect on October 17, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. John Kolotos, U.S. Department of 
Education, 600 Independence Avenue, SW., ROB-3, room 3045, Washington, 
DC 20202-5346. Telephone: (202) 708-7888. Individuals who use a 
telecommunications device for the deaf (TDD) may call the Federal 
Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 
p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: Section 668.163 (Requesting funds) contains 
a requirement that each institution include in any request for cash the 
CFDA number identifying the source of the requested funds and the 
amount of funds for each program for which funds are sought in the 
request (61 FR 61796; December 1, 1995). The Secretary has continued to 
evaluate methods of requesting funds in light of refinements in 
information technology now available to recipient institutions and to 
the Department, and has decided to defer any change in this aspect of 
the procedure for requesting cash until future award years. At that 
time, the Secretary plans to make available to institutions a more 
precise yet easily used request method that will better identify the 
program authorization under which funds are requested. The procedural 
requirement for identification by CFDA number will therefore no longer 
be necessary.
    Changes to Sec. 668.163(a)(3) were previously made in regulations 
promulgated on June 30, 1995 (60 FR 34432) with the expressed intent of 
clarifying the procedures for payment under the reimbursement funding 
method. The language adopted there unfortunately suggested that the 
procedures had been changed rather than merely clarified. Under the 
reimbursement funding method, the Department reimburses an institution 
for the amounts the institution has expended by disbursing its own 
funds for the purpose of providing grant, loan, or work study 
assistance to its students under Title IV of the Higher Education Act 
of 1965, as amended (HEA). That disbursement may be made, as provided 
in program regulations, either by check or by credit to the student's 
account for tuition and other charges then owed, or, with the consent 
of the student, for later payment to the student. Until the 
disbursement has been made, however, the institution has no 
reimbursement claim against the Department. The revised language, which 
referred to the disbursements as those that the institution ``will'' 
make immediately after receiving payment from the Department was 
intended to reference situations where the institution had credited 
student accounts but not yet paid the student. This revised language 
did not accurately describe this procedure. The Secretary therefore 
corrects Sec. 668.163(a)(3) to restore a description of reimbursement 
requirements as they have been consistently understood and applied by 
the Department.
    Under those reimbursement procedures, the institution has been 
required to disburse fully any amounts for which it seeks 
reimbursement, including amounts paid to students directly or credited, 
by student consent, to their accounts for later payment. For 
reimbursement purposes, however, the Secretary now considers an 
institution to have made a disbursement for which a reimbursement claim 
is authorized when the institution has credited the student's account 
for later payment to the student. The Secretary recognizes the 
propriety of this claim because of the nature of the obligation the 
institution incurs by making that credit. By crediting the student's 
account, the institution incurs a legal obligation to pay the student 
the amount credited, to the extent that the student remains eligible. 
The institution remains legally obligated to make that payment even if, 
by the process of administrative offset, the Department applies funds 
otherwise payable to the institution for that approved reimbursement 
claim to satisfy a debt owed by the institution.

Waiver of Proposed Rulemaking

    In accordance with the Administrative Procedure Act, 5 U.S.C. 553, 
it is the practice of the Secretary to offer interested parties the 
opportunity to comment on proposed regulations. However, the Secretary 
has determined that these amendments to Sec. 668.163(a) to revise and 
clarify the procedure for presenting cash requests to the Department 
are procedural rules under the exemption from rulemaking requirements 
in 5 U.S.C. 553(b)(A) and do not require publication for public 

Executive Order 12866

    These regulations have been reviewed in accordance with Executive 
Order 12866. Under the terms of the order the Secretary has assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the proposed regulations are 
those determined by the Secretary to be necessary for administering 
this program effectively and efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these regulations, the Secretary has determined 
that the benefits of the regulations justify the costs.
    The Secretary has also determined that this regulatory action does 
not unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.

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 programs under the 
HEA. These regulations, however, would not have a significant impact on 
any entities affected. They do not impose excessive regulatory burdens 
or require unnecessary Federal supervision. The regulations clarify 
existing requirements and relieve unnecessary regulatory burden.

Paperwork Reduction Act of 1995

    These proposed regulations have been examined under the Paperwork 
Reduction Act of 1995 and have been found to contain no information 
collection requirements.

Assessment of Educational Impact

    Based on its own review, the Department has determined that the 
regulations in this document do not require transmission of information 
that is being gathered by or is available from any other agency or 
authority of the United States.

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List of Subjects in 34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Education, Grant programs--education, Loan 
programs--education, Reporting and recordkeeping requirements, Student 

    Dated: September 12, 1996.
Richard W. Riley,
Secretary of Education.
(Catalog of Federal Domestic Assistance Number not applicable.)

    The Secretary amends Part 668 of Title 34 of the Code of Federal 
Regulations as follows:


    1. The authority citation for part 668 continues to read as 

    Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, 1099c, and 
1141, unless otherwise noted.

    2. Section 668.163 is amended by removing paragraph (a)(2)(iii) and 
revising paragraph (a)(3) to read as follows:

Sec. 668.163  Requesting funds.

    (a) * * *
    (3) Reimbursement payment method. Under the reimbursement payment 
    (i) An institution must first make disbursements to students and 
parents for the amount of funds those students and parents are eligible 
to receive under the Federal Pell Grant, Direct Loan, and campus-based 
programs before the institution may seek reimbursement from the 
Secretary for those disbursements. The Secretary considers an 
institution to have made a disbursement if the institution has either 
credited a student's account or paid a student or parent directly with 
its own funds;
    (ii) An institution seeks reimbursement by submitting to the 
Secretary a request for funds that does not exceed the amount of the 
actual disbursements the institution has made to students and parents 
included in that request;
    (iii) As part of the institution's reimbursement request, the 
Secretary requires the institution to--
    (A) Identify the students for whom reimbursement is sought; and
    (B) Submit to the Secretary or entity approved by the Secretary 
documentation that shows that each student and parent included in the 
request was eligible to receive and has received the title IV, HEA 
program funds for which reimbursement is sought; and
    (iv) The Secretary approves the amount of the institution's 
reimbursement request for a student or parent and pays the institution 
that amount, if the Secretary determines with regard to that student or 
parent that the institution--
    (A) Accurately determined the student's eligibility for title IV, 
HEA program funds;
    (B) Accurately determined the amount of title IV, HEA program funds 
paid to the student or parent; and
    (C) Submitted the documentation required under paragraph 
(a)(3)(iii) of this section.
* * * * *
[FR Doc. 96-23853 Filed 9-16-96; 8:45 am]