[Rules and Regulations]               
[Page 40621-40626]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jy98-13]


[[Page 40621]]

_______________________________________________________________________

Part III





Department of Education





_______________________________________________________________________



34 CFR Parts 600 and 668



Institutional Eligibility; Student Assistance General Provisions; Final 
Rule


[[Page 40622]]



DEPARTMENT OF EDUCATION

34 CFR Parts 600 and 668

RIN 1840-AC47

 
Institutional Eligibility; Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Final Regulations.

-----------------------------------------------------------------------

SUMMARY: The Secretary amends the Institutional Eligibility and Student 
Assistance General Provisions regulations. These technical amendments 
are necessary to correct cross-references, delete references to 
programs that are no longer funded, and make a number of nomenclature 
changes that provide the correct names of various Title IV, HEA 
programs.

EFFECTIVE DATE: These regulations take effect July 29, 1998.

FOR FURTHER INFORMATION CONTACT: Lorraine Kennedy, U.S. Department of 
Education, 600 Independence Avenue, SW, Regional Office Building 3, 
Room 3045, Washington, D.C. 20202-5451. Telephone: (202) 708-8242. 
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.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact persons listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: The Institutional Eligibility regulations, 
34 CFR part 600, and the Student Assistance General Provisions 
regulations, 34 CFR part 668 are amended to clarify regulations, and to 
correct errors and omissions.
    All references to Income Contingent Loan (ICL), State Postsecondary 
Review Entity (SPRE), and Presidential Access Scholarship (PAS) 
throughout 34 CFR parts 600 and 668 have been removed because the ICL 
program was eliminated and the other two programs were not funded.
    References to the name of the Direct Loan Program under 34 CFR 
parts 600 and 668 have been changed to conform to the program names set 
fourth in the William D. Ford Federal Direct Loan (Direct Loan) Program 
regulations, 34 CFR part 685. As required, under 34 CFR part 685 and 
appropriate sections throughout the regulations, other conforming 
changes have been made to incorporate the Direct Loan Program.
    All references to Sec. 668.7 have been removed and replaced with 
references to the correct sections in Subpart C of the Student 
Assistance General Provisions in accordance with the regulations that 
were published in the Federal Register on December 1, 1995.
    These regulations change current Student Right-to-Know (SRK) 
regulations by incorporating some technical corrections to the December 
1, 1995 SRK regulations; these changes are made to reflect statutory 
provisions omitted in the December 1, 1995 SRK regulations. Other 
changes being made in these regulations reflect recent statutory 
changes to the SRK provisions of the Higher Education Act of 1965, as 
amended (HEA); these recent statutory changes were made to the HEA by 
Pub.L. 105-18 entitled ``1997 Emergency Supplemental Appropriations Act 
for Recovery From Natural Disasters, and for Overseas Peacekeeping 
Efforts, Including Those in Bosnia.''

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 regulatory 
changes in this document correct minor technical errors and omissions 
in the Institutional Eligibility regulations, 34 CFR part 600 and the 
Student Assistance General Provisions regulations, 34 CFR part 668. The 
changes in this document do not establish any new substantive rules. 
Therefore, the Secretary has determined that publication of a proposed 
rule is unnecessary and contrary to the public interest under 5 U.S.C. 
553(b)(B). For the reasons stated, the Secretary also waives the 
delayed effective date under 5 U.S.C. 553(d).
    The Secretary certifies that these final regulations will not have 
significant economic impact on a substantial number of small entities. 
Small entities affected by these regulations are small institutions of 
higher education. These regulations contain technical amendments 
designed to clarify and correct current regulations. The changes will 
not have a significant economic impact on the institutions affected.

Paperwork Reduction Act of 1995

    These 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.

Electronic Access to This Document

    Anyone may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or 
portable document format (pdf) on the World Wide Web at either of the 
following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html

    To use the pdf you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the pdf, call the U.S. Government Printing 
Office toll free at 1-888-293-6498.

List of Subjects in 34 CFR Parts 600 and 668

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

    Dated: July 21, 1998.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.

    The Secretary amends Parts 600 and 668 of Title 34 of the Code of 
Federal Regulations as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

    1. The authority citation for part 600 continues to read as 
follows:

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


Sec. 600.2  [Amended]

    2. Section 600.2 is amended by capitalizing the ``P'' in the 
definition of ``Federal Family Education Loan (FFEL) programs''.


Sec. 600.9  [Amended]

    3. Section 600.9(b)(2)(ii) is amended by removing ``or SPRE,''.


Sec. 600.40  [Amended]

    4. Section 600.40 is amended by adding the word ``or'' at the end 
of paragraph (a)(1)(iv)(A), removing ``; or'' at the end of paragraph 
(a)(1)(iv)(B) and adding a period in its place, and removing paragraph 
(a)(1)(iv)(C).

[[Page 40623]]

Sec. 600.41  [Amended]

    5. Section 600.41 is amended by adding the word ``or'' at the end 
of paragraph (a)(1)(ii)(F), removing the word ``or'' at the end of 
paragraph (a)(1)(ii)(G), removing paragraph (a)(1)(ii)(H), and removing 
paragraph (e)(3).


Sec. 600.55  [Amended]

    6. Section 600.55 is amended by removing ``668.7(a)(4)(i) through 
(iii)'' from paragraph (a)(5)(i)(A) and adding, in its place, 
``668.33''.

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

    7. The authority citation for part 668 continues to read as 
follows:

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

    8. Section 668.1 is amended by removing paragraphs (c)(3), (c)(7), 
and (c)(11); redesignating paragraphs (c)(4), (5), (6), (8), (9), (10), 
and (12) as paragraphs (c)(3), (4), (5), (6), (7), (8), and (10), 
respectively; and adding a new paragraph (c)(9) to read as follows:


Sec. 668.1  Scope.

* * * * *
    (c) * * *
    (9) The William D. Ford Federal Direct Loan (Direct Loan) Program 
(20 U.S.C. 1087a et seq.; 34 CFR part 685); and
* * * * *
    9. Section 668.2(b) is amended by removing the definitions of 
``Direct loan,'' ``Federal Direct PLUS loan,'' ``Federal Direct 
Stafford loan,'' ``Federal Direct Student loan,'' ``Federal Direct 
Student Loan (FDSL) Program,'' ``Income Contingent Loan (ICL) 
program,'' ``Payment period,'' and ``Presidential Access Scholarship 
(PAS) program'' and the authority citations following the definitions; 
by removing ``while they were students'', and by adding ``Federal 
Consolidation Loan,'' after ``(as in effect before October 17, 1986),'' 
the first time it appears in the definition of ``Federal Consolidation 
Loan program''; removing the word ``natural'' in the definition of 
``Parent'' and adding, in its place, the word ``biological''; removing 
``and in 34 CFR 691.2 for purposes of the PAS Program'' in the 
definitions of ``Valid institutional student information report (valid 
ISIR)'' and ``Valid student aid report (valid SAR)''; and adding new 
definitions for ``Direct Loan Program loan,'' ``Direct PLUS Loan,'' 
``Direct Subsidized Loan,'' ``Direct Unsubsidized Loan,'' ``Federal 
Direct PLUS Program,'' ``Federal Direct Stafford/Ford Loan Program,'' 
``Federal Direct Unsubsidized Stafford/Ford Loan Program,'' ``William 
D. Ford Federal Direct Loan (Direct Loan) Program'' and authority 
citations following the definitions in alphabetical order to read as 
follows:


Sec. 668.2  General definitions.

* * * * *
    (b) * * *
    Direct Loan Program loan: A loan made under the William D. Ford 
Federal Direct Loan Program.

(Authority: 20 U.S.C. 1087a et seq.)

    Direct PLUS Loan: A loan made under the Federal Direct PLUS 
Program.

(Authority: 20 U.S.C. 1078-2 and 1087a et seq.)

    Direct Subsidized Loan: A loan made under the Federal Direct 
Stafford/Ford Loan Program.

(Authority: 20 U.S.C. 1071 and 1087a et seq.)

    Direct Unsubsidized Loan: A loan made under the Federal Direct 
Unsubsidized Stafford/Ford Loan Program.

(Authority: 20 U.S.C. 1087a et seq.)
* * * * *
    Federal Direct PLUS Program: A loan program authorized by Title IV, 
Part D of the HEA that is one of the components of the Direct Loan 
Program. The Federal Direct PLUS Program provides loans to parents of 
dependent students attending schools that participate in the Direct 
Loan Program. The borrower is responsible for the interest that accrues 
during any period.

(Authority: 20 U.S.C. 10782 and 1087a et seq.)

    Federal Direct Stafford/Ford Loan Program: A loan program 
authorized by Title IV, Part D of the HEA that is one of the components 
of the Direct Loan Program. The Federal Direct Stafford/Ford Loan 
Program provides loans to undergraduate, graduate, and professional 
students attending schools that participate in the Direct Loan Program. 
The Secretary subsidizes the interest while the borrower is in an in-
school, grace, or deferment period.

(Authority: 20 U.S.C. 1071 and 1087a et seq.)

    Federal Direct Unsubsidized Stafford/Ford Loan Program: A loan 
program authorized by Title IV, Part D of the HEA that is one of the 
components of the Direct Loan Program. The Federal Direct Unsubsidized 
Stafford/Ford Loan Program provides loans to undergraduate, graduate, 
and professional students attending schools that participate in the 
Direct Loan Program. The borrower is responsible for the interest that 
accrues during any period.

(Authority: 20 U.S.C. 1087a et seq.)
* * * * *
    William D. Ford Federal Direct Loan (Direct Loan) Program: The loan 
program authorized by Title IV, Part D of the HEA.

(Authority: 20 U.S.C. 1087a et seq.)


Sec. 668.8  [Amended]

    10. Section 668.8(d)(3) is amended by removing ``Federal Stafford 
Loan, Federal PLUS, and Federal SLS'' and adding, in its place, ``FFEL 
and Direct Loan''.


Sec. 668.13  [Amended]

    11. Section 668.13 is amended by removing ``the FDSL Program, or 
the Federal Stafford Loan, Federal SLS, or Federal PLUS Program'' and 
adding, in its place, ``the Direct Loan Program, or the FFEL Program,'' 
in paragraph (a)(4)(i) introductory text; and removing ``(f)(1)'' and 
adding, in its place, ``(d)(1)'' in paragraph (d)(2)(i).
    12. Section 668.14 is amended by removing paragraph (b)(4)(ii); 
redesignating paragraphs (b)(4)(iii) through (vi), as (b)(4)(ii) 
through (v), respectively; removing ``Federal Stafford Loan, Federal 
PLUS, and Federal SLS'' and adding, in its place, ``Federal Stafford 
Loan and Federal PLUS'' in redesignated paragraph (b)(4)(ii); removing 
``Federal SLS,'' in paragraph (b)(7); removing ``Federal Stafford Loan, 
Federal PLUS, and Federal SLS'' and adding, in its place, ``Federal 
Stafford Loan and Federal PLUS'' in paragraph (b)(15); removing ``State 
postsecondary review entities designated under 34 CFR part 667,'' in 
paragraph (b)(17); removing ``, State postsecondary review entities 
designated under 34 CFR part 667,'' in paragraph (b)(23); and revising 
paragraphs (b)(8), (11), and (16) to read as follows:


Sec. 668.14  Program participation agreement.

* * * * *
    (b) * * *
    (8) It will not provide any statement to any student or 
certification to any lender in the case of an FFEL Program loan, or 
origination record to the Secretary in the case of a Direct Loan 
Program loan that qualifies the student or parent for a loan or loans 
in excess of the amount that the student or parent is eligible to 
borrow in accordance with sections 425(a), 428(a)(2), 428(b)(1)(A) and 
(B), 428B, 428H, and 455(a) of the HEA;
* * * * *
    (11) In the case of an institution participating in the FFEL 
program, the

[[Page 40624]]

institution will inform all eligible borrowers, as defined in 34 CFR 
part 682, enrolled in the institution about the availability and 
eligibility of those borrowers for State grant assistance from the 
State in which the institution is located, and will inform borrowers 
from another State of the source of further information concerning 
State grant assistance from that State;
* * * * *
    (16) In the case an institution that changes ownership that results 
in a change of control, or that changes its status as a main campus, 
branch campus, or an additional location, the institution will, to 
participate in the FFEL Program, develop a default management plan for 
approval by the Secretary and implement the plan for at least two years 
after the change in control or status;
* * * * *
    13. In Sec. 668.16, paragraph (e)(2)(i) is amended by removing 
``668.7(c)'' and adding, in its place, ``668.34''; paragraph (j)(1) is 
amended by removing ``State postsecondary review entities designated 
under 34 CFR part 667,''; and paragraph (m)(1) introductory text and 
(m)(1)(i) and the authority citation are revised to read as follows:


Sec. 668.16  Standards of administrative capability.

* * * * *
    (m)(1) Has an FFEL Program cohort default rate, a Direct Loan 
cohort rate, or where applicable, a weighted average cohort rate--
    (i) As defined in Sec. 668.17, that is less than 25 percent for 
each of the three most recent fiscal years for which the Secretary has 
determined the institution's rate; and
* * * * *
(Authority: 20 U.S.C. 1082, 1985, 1094, and 1099c)

    14. Section 668.19 is amended by removing ``Federal Direct Stafford 
Loan'' and adding, in its place, ``Direct Subsidized Loan or Direct 
Unsubsidized Loan'' and by removing ``Federal Direct PLUS'' and adding, 
in its place, ``Direct PLUS Loan'' in paragraph (a)(3)(iv); removing 
``Federal Direct Stafford Loan'' and adding, in its place, ``Direct 
Subsidized or Direct Subsidized Loan'' in paragraph (a)(3)(v); and by 
removing ``Federal Direct PLUS'' and adding, in its place, ``Direct 
PLUS Loan'' in paragraph (a)(3)(vi).
    15. Section 668.20 is amended by revising paragraph (c) 
introductory text and paragraph (d)(2) to read as follows:


Sec. 668.20  Limitations on remedial coursework that is eligible for 
Title IV, HEA program assistance.

* * * * *
    (c) In determining a student's enrollment status under the Title 
IV, HEA programs or a student's cost of attendance under the campus-
based, FFEL, and Direct Loan programs, an institution may not take into 
account any noncredit or reduced credit remedial course if--
* * * * *
    (d) * * *
    (2) A student's cost of attendance under the campus-based, FFEL, 
and Direct Loan programs.
* * * * *


Sec. 668.21  [Amended]

    16. Section 668.21 is amended by removing ``Pell Grant, SEOG, ICL, 
and'' in paragraph (a)(1), and adding, in its place, ``Federal Pell 
Grant, FSEOG, and Federal''.
    17. Section 668.22 is amended by revising paragraph (c)(2)(ii); 
removing ``Federal Stafford loan, Federal PLUS, Federal SLS, Federal 
Direct Stafford, or Federal Direct PLUS Program'' in paragraphs 
(f)(1)(ii), (g)(3)(ii) and (h)(1), and adding, in its place, ``FFEL, or 
Direct Loan Program'; removing ``unsubsidized Federal Direct Stafford 
loans'' in paragraph (h)(1)(iv), and adding, in its place, ``Direct 
Unsubsidized Loans''; removing ``subsidized Federal Direct Stafford 
loans'' in paragraph (h)(1)(v), and adding, in its place ``Direct 
Subsidized Loans''; removing ``Federal'' and capitalizing ``L'' in 
``loans'' in paragraph (h)(i)(vi); removing ``Federal Stafford Loan, 
Federal PLUS, Federal SLS, Federal Direct Stafford Loan or Federal 
Direct PLUS'' in paragraph (h)(2)(ii), and adding, in its place ``FFEL 
or Direct Loan''; removing ``Federal Stafford Loan, Federal PLUS, 
Federal SLS Program, Federal Direct Stafford, or Federal Direct PLUS'' 
in paragraph (f)(2)(i), and adding, in its place ``FFEL, or Direct Loan 
Program''; revising paragraph (g)(2)(ii)(B); removing ``Federal PLUS, 
Federal SLS'' in paragraph (h)(2)(iii), and adding, in its place, ``and 
Federal PLUS''; and removing ``Federal Stafford Loan, Federal PLUS, and 
Federal SLS'' in paragraph (h)(2)(iv), and adding, in its place, ``and 
FFEL''; removing ``Federal Stafford Loan, Federal PLUS, Federal SLS, 
Federal Direct Stafford, and Federal Direct PLUS programs'' in 
paragraph (h)(2)(v), and adding, in its place, ``FFEL, and Direct Loan 
Programs''; removing ``Federal Direct PLUS loans'' in paragraph (i), 
and adding, in its place, ``Direct PLUS Loans'' to read as follows:


Sec. 668.22  Institutional refunds and repayments.

* * * * *
    (c) * * *
    (2) * * *
    (ii) Late disbursements of loans made under the FFEL and Direct 
Loan Programs in accordance with 34 CFR 682.207(d) and 34 CFR 
685.303(d), respectively; and
* * * * *
    (g) * * *
    (2) * * *
    (ii) * * *
    (B) Late disbursements of loans made under the FFEL and Direct Loan 
programs in accordance with 34 CFR 682.207(d) and 34 CFR 685.303(d), 
respectively; and
* * * * *


Sec. 668.25  [Amended]

    18. Section 668.25 is amended by removing ``or Federal SLS'' in 
paragraph (c)(4); and removing ``, Federal PLUS, and Federal SLS'' in 
paragraph (c)(4)(ii), and adding, in its place, ``and Federal PLUS''.


Sec. 668.26  [Amended]

    19. Section 668.26 is amended by removing ``or FDSL'' in paragraph 
(b)(4); removing ``and ICL'' in paragraph (b)(6); removing ``and 
Federal SLS'' in paragraph (c)(2); removing ``Federal Stafford or 
Federal SLS'' both times it appears in paragraph (d)(2) introductory 
text and adding, in its place, ``Federal Family Education Loan 
Programs''; removing ``deliver'' in paragraph (d)(3) introductory text, 
and adding, in its place, ``disburse''; removing ``disbursement of a'' 
in paragraph (d)(3); removing ``FDSL'' in paragraphs (d)(3) 
introductory text and (d)(3)(i), and adding, in its place, ``Direct 
Loan''; removing ``Federal Direct Student'' in paragraph (d)(3) 
introductory text, and adding, in its place, ``Direct Loan Program''.


Sec. 668.32  [Amended]

    20. Section 668.32 is amended by removing ``, FSEOG, and SSIG'' and 
adding, in its place ``and FSEOG'' in paragraph (c)(1); and by removing 
``Student'' and adding ``William D. Ford'' before ``Federal'' in 
paragraph (k)(5).
    21. Section 668.42 is amended by revising paragraph (b) 
introductory text to read as follows:


Sec. 668.42  Preparation and dissemination of materials.

* * * * *

[[Page 40625]]

    (b) Make those materials available to the student through 
appropriate publications and mailings before the student enters into a 
financial obligation with the institution, to--
* * * * *


Sec. 668.43  [Amended]

    22. Section 668.43(c)(6) is amended by removing ``34 CFR 685.303'' 
and adding, in its place, ``34 CFR 685.304''; by removing ``Student''; 
by adding ``William D. Ford'' before ``Federal Direct''; and by 
removing ``and Federal SLS programs'' and adding, in its place, 
``Program''.


Sec. 668.46  [Amended]

    23. Section 668.46 is amended by removing ``July 1, 1996'' in 
paragraph (a)(1), and adding, in its place, ``September 1, 1996''; 
removing ``July 1st of one year and June 30th'' in paragraph 
(a)(2)(ii), and adding, in its place, ``September 1 of one year and 
August 31''; removing ``July 1, 1996 and June 30, 1997'' in paragraph 
(a)(5)(i), and adding, in its place, ``September 1, 1996 and August 31, 
1997''; and removing ``June 30'' in paragraph (a)(5)(ii), and adding, 
in its place, ``August 31''.


Sec. 668.46  [Amended]

    24. The heading of the note following Sec. 668.48 is corrected to 
read ``Note to paragraph (c)''.
    25. Section 668.49 is amended by adding ``, categorized by race and 
gender'' before the period at the end of paragraph (a)(1)(iii); adding 
a new paragraph (a)(1)(vi); removing ``and (c)'' in paragraph (b), and 
adding, in its place, ``, (c), and (d)''; and revising paragraph (d) to 
read as follows:


Sec. 668.49  Report on completion and graduation rates for student-
athletes.

    (a) * * *
    (1) * * *
    (vi) The average completion or graduation rate and transfer-out 
rate of the four most recent classes of entering students described in 
Sec. 668.46 (a)(2), (3), and (4) who received athletically-related 
student aid, categorized by race and gender within each sport. If an 
institution has completion or graduation rates and transfer-out rates 
for fewer than four of those classes, it shall disclose the average 
rate of those classes for which it has rates.
* * * * *
    (d) The provisions of Sec. 668.46(e) apply for purposes of this 
section.


Sec. 668.51  [Amended]

    26. Section 668.51(a) is amended by removing ``Federal Direct 
Student Loan (FDSL)'' and adding, in its place, ``Federal Direct 
Stafford/Ford Loan programs''.


Sec. 668.54  [Amended]

    27. Section 668.54 is amended by removing ``Student'' in paragraph 
(a)(2)(i), and adding, in its place ``Stafford/Ford'.


Sec. 668.55  [Amended]

    28. Section 668.55 is amended by removing ``FDSL, or'' in paragraph 
(c), and adding, in its place ``or Federal Direct Stafford/Ford Loan'; 
removing the comma after the word ``Grant'' and adding, in its place 
``or'' in paragraph (c)(1); removing ``FDSL or program'' in paragraph 
(c)(1); and adding ``, or originating a Direct Subsidized Loan'' after 
the word ``application'' in paragraph (c)(1); removing the comma after 
the word ``Grant'' and adding, in its place ``or'' in paragraph (c)(2); 
removing ``FDSL, or program'' after the word ``campus-based'' in 
paragraph (c)(2); removing ``or William D. Ford Federal Direct Loan 
application'' and adding, in its place ``application or previously 
originated Direct Subsidized Loan'' in paragraph (c)(2); and adding 
``If the institution has previously originated a Direct Subsidized Loan 
for a borrower, the school shall not update the borrower's dependence 
status on the loan origination record.'' after the last sentence in 
paragraph (d)(2).
    29. Section 668.58 is amended by removing the word ``or'' at the 
end of paragraph (a)(1)(ii); removing the period at the end of 
paragraph (a)(1)(iii) and adding, in its place, ``; or''; removing 
``William D. Ford Federal'' in paragraphs (c), (d)(1), and (d)(2); 
revising paragraphs (a)(1)(i), (a)(2)(ii)(A), and (a)(2)(iii); and 
adding a new paragraph (a)(1)(iv) to read as follows:


Sec. 668.58  Interim disbursements.

* * * * *
    (a) * * *
    (1) * * *
    (i) Disburse any Federal Pell Grant or campus-based program funds 
to the applicant;
* * * * *
    (iv) Originate or disburse a Direct Subsidized Loan.
* * * * *
    (2) * * *
    (ii)(A) May make one disbursement of any combination of Federal 
Pell Grant, Federal Perkins Loan, or FSEOG funds for the applicant's 
first payment period; and
* * * * *
    (iii)(A) May withhold certification of the applicant's Federal 
Stafford Loan application or origination of the applicant's Direct 
Subsidized Loan; or
    (B) May certify the Federal Stafford Loan application or originate 
the Direct Subsidized Loan provided that the institution does not 
deliver Federal Stafford Loan proceeds or disburse Direct Subsidized 
Loan proceeds.
* * * * *
    30. Section 668.59 is amended by adding ``Federal'' before ``Pell'' 
in paragraph (b)(1); replacing ``William D. Ford Federal'' with 
``Federal Direct Stafford/Ford'' in paragraphs (c) introductory text 
and (c)(1)(ii); and revising paragraph (d)(1) to read as follows:


Sec. 668.59  Consequences of a change in application information.

* * * * *
    (d)(1) If the institution selects an applicant for verification for 
an award year who previously received a Direct Subsidized Loan for that 
award year, and as a result of verification the loan amount is reduced, 
the institution shall comply with the procedures specified in 
Sec. 668.61(b)(2).
* * * * *
    31. Section 668.60 is amended by removing ``FDSL'' in paragraphs 
(b)(1)(i)(A) and (b)(1)(iii); removing ``FDSL'' and adding, in its 
place, ``Federal Direct Stafford/Ford Loan'' in paragraph (d); removing 
``FDSL and PAS'' and adding, in its place, ``and Federal Direct 
Stafford/Ford Loan'' in paragraph (b) introductory text; removing 
``CWS'' and adding, in its place, ``FWS'' in paragraph (b)(1)(i)(B); 
removing ``William D. Ford Federal Direct Loan'' in paragraph 
(b)(1)(i)(D) and adding, in its place, ``Direct Subsidized Loan''; and 
revising paragraphs (b)(1)(i)(C), (b)(1)(ii), and (e)(2) to read as 
follows:


Sec. 668.60  Deadlines for submitting documentation and the 
consequences of failing to provide documentation.

* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (C) Certify the applicant's Federal Stafford Loan application or 
originate the applicant's Direct Subsidized Loan; or
* * * * *
    (ii) The institution shall return to the lender, or to the 
Secretary, in the case of a Direct Subsidized Loan, any Federal 
Stafford Loan or Direct Subsidized Loan proceeds that otherwise would 
be payable to the applicant; and
* * * * *
    (e) * * *

[[Page 40626]]

    (2) Certify that applicant's Federal Stafford Loan application, 
originate that applicant's Direct Subsidized Loan, or process that 
applicant's Federal Stafford Loan or Direct Subsidized Loan proceeds; 
or
* * * * *
    32. Section 668.61 is amended by removing ``FDSL, FSEOG or'' and 
adding, in its place, ``or FSEOG'' in paragraph (a)(2)(ii)(B); removing 
``or William D. Ford Federal Direct Loan'' in paragraph (b); 
redesignating paragraph (b) as (b)(1); and adding a new paragraph 
(b)(2) to read as follows:


Sec. 668.61  Recovery of funds.

* * * * *
    (b) * * *
    (2) If the institution determines as a result of the verification 
process that a student received Direct Subsidized Loan proceeds for an 
award year in excess of the student's need for the loan, the 
institution shall reduce or cancel one or more subsequent disbursements 
to eliminate the amount in excess of the student's need.


Sec. 668.81  [Amended]

    33. Section 668.81 is amended by removing paragraph (e).


Sec. 668.83  [Amended]

    34. Section 668.83 is amended by removing ``, Federal PLUS, or 
Federal SLS'' and adding, in its place, ``or Federal PLUS'' in 
paragraph (c)(2)(i)(B); removing ``, Federal PLUS, and Federal SLS'' 
and adding, in its place ``or Federal PLUS'' in paragraph 
(c)(2)(iii)(D); and removing ``, Federal PLUS, or Federal SLS Program'' 
and adding, in its place, ``or Federal PLUS programs'' in paragraph 
(d)(1)(iii).


Sec. 668.94  [Amended]

    35. Section 668.94 is amended by removing the period after 
``termination'' and adding, in its place, ``--'' in paragraph (a); and 
removing ``, Federal PLUS, or Federal SLS Program'' and adding, in its 
place, ``Program or Federal PLUS programs'' in paragraph (a)(5).


Sec. 668.130  [Amended]

    36. Section 668.130 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a) and 
(b).


Sec. 668.131  [Amended]

    37. Section 668.131 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in the definitions of 
``Eligible noncitizen'' and ``Primary confirmation.''


Sec. 668.132  [Amended]

    38. Section 668.132 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a)(2) 
and (b).


Sec. 668.133  [Amended]

    39. Section 668.133 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a) 
introductory text (twice), and (a)(1)(i).


Sec. 668.134  [Amended]

    40. Section 668.134 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a) 
introductory text, (a)(1), (a)(3), (b)(1), and (b)(2).


Sec. 668.136  [Amended]

    41. Section 668.136 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a) and 
(b) introductory text.


Sec. 668.137  [Amended]

    42. Section 668.137 is amended by removing ``Sec. 668.7(a)(4)(ii)'' 
and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraph (a); and 
removing ``or certify a Federal Stafford, Federal PLUS, or Federal SLS 
loan'' and adding, in its place, ``certify a Federal Stafford or 
Federal PLUS loan application, or originate a Direct Loan Program 
loan'' in paragraph (b).
    43. Section 668.138 is amended by revising paragraphs (a) and (b) 
to read as follows:


Sec. 668.138  Liability.

    (a) A student is liable for any SSIG, FSEOG, or Federal Pell Grant 
payment and for any Federal Stafford, Direct Subsidized, Direct 
Unsubsidized or Federal Perkins loan made to him or her if the student 
was ineligible for the Title IV, HEA assistance.
    (b) A Federal PLUS or Direct PLUS Loan borrower is liable for any 
Federal PLUS or Direct PLUS Loan made to him or her on behalf of an 
ineligible student.
* * * * *
    44. Section 668.139 is amended by revising paragraphs (b) and (d) 
to read as follows:


Sec. 668.139  Recovery of payments and loan disbursements to ineligible 
students.

* * * * *
    (b) If an institution causes a Federal Stafford, Federal PLUS, 
Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan to be 
disbursed to or on behalf of an ineligible student for which it is not 
liable in accordance with Sec. 668.138, it shall assist the Secretary 
in recovering the funds by notifying the lender in the case of an FFEL 
Program loan or the Secretary in the case of a Direct Loan Program loan 
that the student has failed to establish eligibility under the 
requirements of Secs. 668.201 or 685.200, as appropriate.
* * * * *
    (d) If an institution is liable for a Federal Stafford, Federal 
PLUS, Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan 
disbursement to an ineligible student, the institution shall repay an 
amount equal to the disbursement to the lender in the case of an FFEL 
Program loan or the Secretary in the case of a Direct Loan Program 
loan, and provide written notice to the borrower.


Sec. 668.166  [Amended]

    45. Section 668.166(a)(1) is amended by adding ``other than Federal 
Perkins Loan Program funds,'' after ``title IV, HEA program funds,'.
    46. Section 668.167 is amended by revising paragraph (a)(3) to read 
as follows:


Sec. 668.167  FFEL Program funds.

    (a) * * *
    (3)(i) An institution may not request a lender to provide it with 
loan funds by EFT or master check for any Federal PLUS Program loan 
earlier than 13 days before the first day of classes for any payment 
period.
    (ii) An institution may not request a lender to provide with loan 
funds by check requiring the endorsement of the borrower for any 
Federal PLUS Program loan earlier than 30 days before the first day of 
classes for any payment period.
* * * * *
[FR Doc. 98-20171 Filed 7-28-98; 8:45 am]
BILLING CODE 4000-01-P