[Federal Register: October 22, 1999 (Volume 64, Number 204)]
[Rules and Regulations]
[Page 57355-57359]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22oc99-14]

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_______________________________________________________________________

Part VI

Department of Education

_______________________________________________________________________

34 CFR Part 668

Student Assistance General Provisions; Final Rule

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DEPARTMENT OF EDUCATION

34 CFR Part 668

RIN 1845-AA07


Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: We amend the regulations governing student eligibility for the
student financial assistance programs authorized under title IV of the
Higher Education Act of 1965, as amended (title IV, HEA programs).
These 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 regulations implement
changes made to the Higher Education Act of 1965, as amended (HEA), by
the Higher Education Amendments of 1998 (Public Law 105-244, enacted
October 7, 1998) (1998 Amendments).

DATES: These regulations are effective July 1, 2000.
    Implementation Date: The changes to Secs. 668.32 and 668.38 reflect
statutory provisions that already are in effect. Institutions may use
these regulations prior to July 1, 2000 as guidance in complying with
those statutory provisions.

FOR FURTHER INFORMATION CONTACT: Lloyd Horwich, U.S. Department of
Education, 400 Maryland Avenue, S.W., ROB-3, Room 3045, Washington,
D.C. 20202-5344. 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: On July 16, 1999, we published a notice of
proposed rulemaking (NPRM) in the Federal Register (64 FR 38504)
proposing to amend the regulations governing student eligibility for
the title IV, HEA programs. In the preamble to the NPRM, we discussed
the following proposed changes:
    * Amending Sec. 668.32(e) to allow a student who completes a
secondary school education in a home school that is treated as a home
school or private school under State law to be eligible to receive
title IV, HEA program funds.
    * Amending Sec. 668.32(h) to provide that a student file his
or her Statement of Educational Purpose with the Department.
    * Amending Sec. 668.32(k)(7) to reflect the name-change of
the SSIG program to the LEAP program.
    * Amending Sec. 668.32 by adding as Sec. 668.32(l) a cross-
reference to the student eligibility criteria concerning drug
convictions described in proposed Sec. 668.40.
    * Amending Sec. 668.38 to provide the conditions under which
a student enrolled in telecommunications courses will not be considered
enrolled in correspondence courses.
    * Adding Sec. 668.40 to provide the conditions under which a
student who has been convicted under Federal or State law of possession
or sale of illegal drugs will be ineligible to receive title IV, HEA
program funds.
    There are no significant differences between the NPRM and these
final regulations, except that these final regulations clarify the
status under Sec. 668.40 of determinations or adjudications for
possession or sale of illegal drugs arising out of a juvenile
proceeding.

Discussion of Student Financial Assistance Regulations Development
Process

    The regulations in this document were developed through the use of
negotiated rulemaking. Section 492 of the HEA requires that, before
publishing any proposed regulations to implement programs under title
IV of the HEA, we obtain public involvement in the development of the
proposed regulations. After obtaining advice and recommendations, we
must conduct a negotiated rulemaking process to develop the proposed
regulations. All proposed regulations must conform to agreements
resulting from the negotiated rulemaking process unless we reopen that
process or explain any departure from the agreements to the negotiated
rulemaking participants.
    These regulations were published in proposed form on July 16, 1999
in conformance with the consensus of the negotiated rulemaking
committee. Under the committee's protocols, consensus meant that no
member of the committee dissented from the agreed-upon language. We
invited comments on the proposed regulations by September 14, 1999, and
18 comments were received. An analysis of the comments and of the
changes in the proposed regulations follows.
    We discuss substantive issues under the sections of the regulations
to which they pertain. Generally, we do not address technical and other
minor changes and suggested changes the law does not authorize us to
make.

Analysis of Comments and Changes

Section 668.32  Student Eligibility-General

Home-schooled students
    Comments: A number of commenters specifically supported our
statement in the NPRM that a student who completes a secondary school
education in a home school setting that is treated as a home school or
private school under State law simply must satisfy the home-school
completion requirements of the State in which the student was home
schooled to be eligible for title IV, HEA program funds.
    Changes: None.
    Comments: A number of commenters specifically supported our
statement in the NPRM that the Secretary will allow a home-schooled
student to self-certify his or her eligibility in the same way a high
school graduate or General Equivalency Degree (GED) recipient may.
    Changes: None.
    Comments: The Department should clarify the meaning of ``exemption
from compulsory attendance requirements under State law'' in proposed
Sec. 668.32(e)(4)(ii).
    Discussion: ``Exemption from compulsory attendance requirements
under State law,'' means that the State does not consider a home-
schooled student to be in violation of the State's truancy laws.
    Changes: None.
    Comments: The Department should clarify whether home-schooled
students must take an ability-to-benefit test to be eligible to receive
Title IV, HEA program funds under proposed Sec. 668.32(e).
    Discussion: Home-schooled students who satisfy the requirements of
Sec. 668.32(e)(4) are eligible to receive title IV, HEA program funds.
They are not required to take an ability-to-benefit test.
    Changes: None.

Section 668.38  Enrollment in Telecommunications and Correspondence
Courses

    Comments: The Department should clarify the status under proposed
Sec. 668.38 of students enrolled in telecommunications courses at
institutions described in section

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521(4)(C) of the Carl D. Perkins Vocational and Applied Technology
Education Act.
    Discussion: Students enrolled in telecommunications courses at
institutions described in section 521(4)(C) of the Carl D. Perkins
Vocational and Applied Technology Education Act are considered to be
enrolled in correspondence courses.
    Changes: None.

Section 668.40  Suspension of eligibility for drug-related offenses

    Comments: The Department should clarify that the provisions of
Sec. 668.40 apply only to a student's eligibility for title IV, HEA
program funds for award years beginning on or after July 1, 2000.
    Discussion: The provisions of Sec. 668.40 apply only to a student's
eligibility for title IV, HEA program funds for award years beginning
on or after July 1, 2000. However, convictions that occur before July
1, 2000 may affect a student's eligibility for title IV, HEA program
funds as of July 1, 2000. For example, a student convicted for the
first time for possession of a controlled substance on February 1, 2000
will be ineligible from July 1, 2000 (the effective date of the
regulations) until February 1, 2001 (one year from the date of
conviction).
    Changes: None.
    Comments: Clarify whether a conviction for multiple counts of
possession or multiple counts of sale is considered a single
conviction.
    Discussion: A conviction for multiple counts of possession or
multiple counts of sale is considered a single conviction. Also, a
determination or adjudication arising out of a juvenile proceeding is
not a conviction for purposes of this regulation.
    Changes: Section 668.40(a)(2) is changed to reflect the above
clarification concerning juvenile violations.
    Comments: The Department should clarify the meaning of
``indefinite'' under Secs. 668.40(b)(1)(iii) and (b)(2)(ii), concerning
the ineligibility period of a student convicted three or more times for
possession of illegal drugs or two or more times for sale of illegal
drugs.
    Discussion: For purposes of this regulation, ``indefinite'' means
permanent, unless (1) the student completes an approved drug
rehabilitation program described in Sec. 668.40(d) or (2) convictions
are reversed, set aside, or removed from the student's record so that
the student has fewer than three convictions for possession and fewer
than two convictions for sale remaining on his or her record, in which
case the student's ineligibility period would be determined by the
number and type of remaining convictions.
    Changes: None.
    Comments: An institution should not be required to be involved in
determining a student's eligibility for title IV, HEA program funds
under this regulation.
    Discussion: We will not require institutions to question their
applicants for title IV, HEA program funds about drug convictions. We
intend to use the aid application process--the Free Application for
Federal Student Aid (FAFSA) and the Student Aid Report (SAR)--to
collect the necessary information from applicants. However, we will
encourage students to notify their financial aid office if their
eligibility status changes.
    Changes: None.
    Comments: An institution should not be liable for funds disbursed
to a student when the student is ineligible under this regulation and
the institution is not aware the student is ineligible.
    Discussion: An institution will not be liable for funds disbursed
to a student who is ineligible under this regulation if the institution
is unaware at the time of disbursement that the student is ineligible.
    Changes: None.
    Comments: Students who regain their eligibility under this
regulation during a payment or enrollment period should be eligible for
aid for the entire payment period (in the case of Pell Grants, FSEOG,
FWS, or Perkins Loans) or the entire enrollment period (in the case of
Direct or FFEL Loans). Similarly, students who lose their eligibility
during a payment or enrollment period should not forego funds until the
beginning of the next payment or enrollment period.
    Discussion: Students who regain eligibility under this regulation
during a payment period will be eligible to receive Pell Grants, FSEOG,
FWS, or Perkins Loans for the entire payment period, and will be
eligible to receive Direct or FFEL Loans for the entire enrollment
period.
    However, students who lose eligibility during a payment period will
be immediately ineligible to receive subsequent disbursements of any
title IV, HEA program funds, and will be required to repay any title
IV, HEA program funds that they receive after losing their eligibility.
Those students will not be considered to have been ineligible for funds
disbursed to them prior to their loss of eligibility. Institutions will
not have to recalculate students' awards on a pro-rata basis.
    Changes: None.
    Comments: Students should be allowed to self-certify both their
eligibility under this regulation for title IV, HEA program funds and
the renewal of their eligibility during a payment period.
    Discussion: We will allow students to self-certify their
eligibility for title IV, HEA program funds on the FAFSA or SAR. We
also will allow institutions to disburse funds to students who regain
eligibility during a payment period or enrollment period, based on
students' self-certification to the institution. Students may not self-
certify their eligibility based on projected eligibility dates (i.e.,
students who will regain eligibility during a payment period may not
self-certify at the beginning of the payment period that they are
eligible, even though as discussed above, students who regain
eligibility during a payment period will be eligible to receive funds
for the entire payment period or enrollment period, as appropriate),
nor may institutions disburse funds based on projected eligibility
dates, but institutions will not be responsible for verifying the
accuracy of students' self-certifications.
    Changes: None.
    Comments: The regulation should not be overly restrictive in
defining what is an acceptable drug rehabilitation program.
    Discussion: We agree, and believe that Sec. 668.40(d) addresses
this concern.
    Changes: None.
    Comments: The Department should provide individualized advice to
students on the meaning of this regulation.
    Discussion: We will provide guidance to students and institutions
over the coming months concerning this regulation.
    Changes: None.

Executive Order 12866

    Under Executive Order 12866, we have assessed the potential costs
and benefits of this regulatory action. The potential costs associated
with this regulatory action are those resulting from statutory
requirements and those we have determined are necessary to administer
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 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.

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    We summarized the potential costs and benefits of this regulatory
action in the preamble to the NPRM.

Paperwork Reduction Act of 1995

    These proposed regulations do not contain any information
collection requirements.

Assessment of Educational Impact

    In the NPRM, we requested comments on whether the proposed
regulations would require transmission of information that any other
agency or authority of the United States gathers or makes available.
Based on the response to the NPRM and on our review, we have determined
that these final regulations do not require transmission of information
that any other agency or authority of the United States gathers or
makes available.

Electronic Access to This Document

    You may view this document in text or Adobe Portable Document
Format (PDF) on the Internet at the following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/legislation/HEA/rulemaking/
http://ifap.ed.gov/csb__html/fedlreg.htm

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, D.C., area at (202) 512-1530.

    Note: The official version of this document is the document
published in the Federal Register. Free Internet access to the
official edition of the Federal Register and the Code of Federal
Regulations is available on GPO Access at: http://
www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance numbers: 84.007 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; and
84.268 William D. Ford Federal Direct Loan Programs)

List of Subjects in 34 CFR Part 668

    Administrative practice and procedure, Colleges and universities,
Student aid, Reporting and recordkeeping requirements.

    Dated: October 18, 1999.
Richard W. Riley,
Secretary of Education.

    The Secretary amends part 668 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 amended to read as
follows:

    Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1088, 1091, 1092,
1094, 1099c, and 1099c-1, unless otherwise noted.

    2. Section 668.32 is amended as follows:
    A. In paragraph (e)(2), by removing ``or'';
    B. In paragraph (e)(3), by adding ``or'' after the semi-colon;
    C. By adding a new paragraph (e)(4) to read as follows;
    D. In paragraph (h), by removing ``, or in the case of a loan made
under the FFEL Program, with the lender'';
    E. In paragraph (j), by removing the ``and'' after the semi-colon;
    F. In paragraph (k)(7), by removing ``SSIG'' and adding in its
place, ``LEAP,'' by removing the period at the end of the paragraph and
adding in its place a semi-colon, and adding ``and'' after the semi-
colon; and
    G. By adding paragraph (l) to read as follows.

Sec. 668.32  Student eligibility--general.

* * * * *
    (e) * * *
    (4) Was home-schooled, and either--
    (i) Obtained a secondary school completion credential for home
school (other than a high school diploma or its recognized equivalent)
provided for under State law; or
    (ii) If State law does not require a home-schooled student to
obtain the credential described in paragraph (e)(4)(i) of this section,
has completed a secondary school education in a home school setting
that qualifies as an exemption from compulsory attendance requirements
under State law;
* * * * *
    (1) Is not ineligible under Sec. 668.40.
* * * * *
    3. Section 668.38 is amended by revising paragraph (b) to read as
follows:

Sec. 668.38  Enrollment in telecommunications and correspondence
courses.

* * * * *
    (b)(1) For purposes of this section, a student enrolled in a
telecommunications course at an institution of higher education is not
enrolled in a correspondence course, if--
    (i) The student is enrolled in a program that leads to a
certificate for a program of study of 1 year or longer, or an
associate, bachelor, or graduate degree; and
    (ii) The number of telecommunications and correspondence courses
the institution offered during its latest completed award year was
fewer than 50 percent of all the courses the institution offered during
that same year.
    (2) For purposes of paragraph (b)(1) of this section, an
institution of higher education is one--
    (i) That is not an institute or school described in section
521(4)(C) of the Carl D. Perkins Vocational and Applied Technology Act;
and
    (ii) At which at least 50 percent of the programs of study offered
by the institution during its latest completed award year led to an
associate, bachelor, or graduate degree.
    (3) For purposes of paragraph (b)(1)(ii) of this section, the
institution must calculate the number of courses using the provisions
contained in 34 CFR 600.7(b)(2).
    4. Section 668.40 is added to read as follows:
    Sec. 668.40 Conviction for possession or sale of illegal drugs.
    (a)(1) A student is ineligible to receive title IV, HEA program
funds if the student has been convicted of an offense involving the
possession or sale of illegal drugs for the period described in
paragraph (b) of this section. However, the student may regain
eligibility before that period expires under the conditions described
in paragraph (c) of this section.
    (2) For purposes of this section, a conviction means only a
conviction that is on a student's record. A conviction that was
reversed, set aside, or removed from the student's record is not
relevant for purposes of this section, nor is a determination or
adjudication arising out of a juvenile proceeding.
    (3) For purposes of this section, an illegal drug is a controlled
substance as defined by section 102(6) of the Controlled Substances Act
(21 U.S.C. 801(6)), and does not include alcohol or tobacco.
    (b)(1) Possession. Except as provided in paragraph (c) of this
section, if a student has been convicted--
    (i) Only one time for possession of illegal drugs, the student is
ineligible to receive title IV, HEA program funds for one year after
the date of conviction;
    (ii) Two times for possession of illegal drugs, the student is
ineligible to receive title IV, HEA program funds for two years after
the date of the second conviction; or

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    (iii) Three or more times for possession of illegal drugs, the
student is ineligible to receive title IV, HEA program funds for an
indefinite period after the date of the third conviction.
    (2) Sale. Except as provided in paragraph (c) of this section, if a
student has been convicted--
    (i) Only one time for sale of illegal drugs, the student is
ineligible to receive title IV, HEA program funds for two years after
the date of conviction; or
    (ii) Two or more times for sale of illegal drugs, the student is
ineligible to receive Title IV, HEA program funds for an indefinite
period after the date of the second conviction.
    (c) If a student successfully completes a drug rehabilitation
program described in paragraph (d) of this section after the student's
most recent drug conviction, the student regains eligibility on the
date the student successfully completes the program.
    (d) A drug rehabilitation program referred to in paragraph (c) of
this section is one which--
    (1) Includes at least two unannounced drug tests; and
    (2)(i) Has received or is qualified to receive funds directly or
indirectly under a Federal, State, or local government program;
    (ii) Is administered or recognized by a Federal, State, or local
government agency or court;
    (iii) Has received or is qualified to receive payment directly or
indirectly from a Federally- or State-licensed insurance company; or
    (iv) Is administered or recognized by a Federally- or State-
licensed hospital, health clinic or medical doctor.

(Authority: 20 U.S.C. 1091(r))

[FR Doc. 99-27673 Filed 10-21-99; 8:45 am]
BILLING CODE 4000-01-U