[Federal Register: November 1, 1999 (Volume 64, Number 210)]
[Rules and Regulations]
[Page 59015-59044]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01no99-17]
[[Page 59015]]
_______________________________________________________________________
Part VII
Department of Education
_______________________________________________________________________
34 CFR Parts 668, 682, and 685
Student Assistance General Provisions, Federal Family Education Loan
Program, the William D. Ford Federal Direct Loan (Direct Loan) Program;
Final Rule
[[Page 59016]]
DEPARTMENT OF EDUCATION
34 CFR Parts 668, 682, and 685
RIN 1845-AA02
Student Assistance General Provisions, Federal Family Education
Loan Program, the William D. Ford Federal Direct Loan (Direct Loan)
Program
AGENCY: Department of Education.
ACTION: Final regulations.
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SUMMARY: We 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Students Program (no longer active), the Federal PLUS Program, and the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 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, enacted October 7, 1998) (the
1998 Amendments) for the treatment of Title IV, HEA program funds when
a student withdraws from an institution.
EFFECTIVE DATE: These regulations are effective July 1, 2000.
IMPLEMENTATION DATE: The Secretary has determined, in accordance with
section 482(c)(2)(A) of the HEA, that institutions may, at their
discretion, choose to implement in their entirety all provisions in
Sec. 668.22 and related provisions in Secs. 668.8, 668.14, 668.16,
668.24, 668.25, 668.26, 668.83, 668.92, 668.95, 668.164, 668.171,
668.173, 682.207, 682.209, 682.604, 682.605, 682.607, 685.211, 685.215,
685.305, and 685.306 on or after November 1, 1999. Furthermore,
pursuant to Section 484B(e) of the HEA, institutions are not required
to implement these provisions until October 7, 2000 (two years from the
enactment of the 1998 Amendments). If an institution chooses to
implement the provisions of section 484B of the HEA after publication
of these final regulations but before October 7, 2000, the
institution--
Must implement these regulations in their entirety;
Must apply these regulations to all students who withdraw
on or after the institution's implementation of these regulations
(i.e., not on a student-by-student basis); and
Cannot revert back to the old provisions of Sec. 668.22.
For further information see ``Implementation Date of These
Regulations'' under the SUPPLEMENTARY INFORMATION section of this
preamble.
FOR FURTHER INFORMATION CONTACT: Dan Klock or Wendy Macias, U.S.
Department of Education, 400 Maryland Avenue, S.W., ROB-3, Room 3045,
Washington, DC 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 August 6, 1999, we published a notice of
proposed rulemaking (NPRM) in the Federal Register (64 FR 43024)
proposing to implement statutory changes made to the HEA, by the 1998
Amendments for the treatment of Title IV, HEA program funds when a
student withdraws from an institution. In the preamble to the NPRM, we
discussed major changes to Sec. 668.22 in the following areas:
The conditions under which Title IV, HEA program funds
would be required to be returned and the conditions under which a
student would be owed a disbursement of Title IV, HEA program funds
upon withdrawal of a student.
* The requirements for making a post-withdrawal
disbursement to a student.
* The determination of a withdrawal date for a student
who withdraws.
* The treatment of a leave of absence for Title IV, HEA
program purposes.
* The calculation of the amount of Title IV, HEA program
funds that a student has earned upon withdrawal, including
differences in the calculation for clock-hour programs and credit-
hour programs, and non-term programs and term programs.
* The responsibility of the institution to return Title
IV, HEA program funds when a student withdraws.
* The responsibility of the student to return Title IV,
HEA program funds upon withdrawal.
* The order in which Title IV, HEA program funds must be
returned to the Title IV, HEA programs.
* A timeframe for the return of Title IV, HEA program
funds by an institution, and a timeframe for an institution to
determine a withdrawal date for a student who withdraws without
notifying the institution.
* The consumer information that an institution must
provide to a student regarding the results of a student's
withdrawal.
In addition, in the preamble to the NPRM we discussed a proposed
change to Sec. 682.207(b)(1)(v) of the FFEL program regulations to
require a lender that is making a direct disbursement to a student
attending a foreign school to notify the foreign school that the
disbursement was made.
These final regulations contain a few significant changes from the
NPRM. These changes are explained fully in the Analysis of Comments and
Changes elsewhere in this preamble.
Conforming changes have been made to the following sections:
Secs. 668.8, 668.14, 668.16, 668.24, 668.25, 668.26, 668.83, 668.92,
668.95, 668.164, 668.171, 668.173, 682.207, 682.209, 682.604, 682.605,
682.607, 685.211, 685.215, 685.305, and 685.306.
Implementation Date of These Regulations
Section 482(c) of the HEA (20 U.S.C. 1089(c)) requires that
regulations affecting programs under Title IV of the HEA be published
in final form by November 1 prior to the start of the award year in
which they apply. However, that section also permits the Secretary to
designate any regulation as one that an entity subject to the
regulation may choose to implement earlier. If the Secretary designates
a regulation for early implementation, he may specify when and under
what conditions the entity may implement it. The sections designated by
the Secretary and the corresponding conditions for early implementation
are set out under the heading IMPLEMENTATION DATE, above.
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, the
[[Page 59017]]
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 proposed regulations must conform to agreements
resulting from the negotiated rulemaking process unless the Secretary
reopens that process or explains any departure from the agreements to
the negotiated rulemaking participants.
These regulations were published in proposed form on August 6,
1999. With the exception of provisions relating to the ``50% discount''
on Title IV grant funds that a student must return, which are located
in Sec. 668.22(h)(3)(ii), the proposed regulations reflected 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. The Secretary invited comments on the
proposed regulations by September 15, 1999, and 176 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 in the proposed regulations, and we do not respond to
comments suggesting changes that the Secretary is not authorized by law
to make.
Analysis of Comments and Changes
General
Comments: A few commenters believed that the proposed rules were
too complicated. Some commenters requested that we prepare and
distribute worksheets to clarify the application of the final
regulations. A few commenters thought that we should distribute or make
available a software program that institutions could use to calculate
the treatment of Title IV, HEA program funds when a student withdraws.
A couple of the commenters requested that we provide institutions with
examples of how the regulations should be applied when a student
withdraws during a summer term. A few commenters believed that the
proposed rules simplified the process of returning Title IV, HEA
program funds when a student withdraws.
Discussion: We believe that some of the commenters' general
concerns about the complexity of the proposed rules may be caused by
statutory provisions. We have responded throughout the Analysis of
Comments and Changes to commenters' specific concerns about complexity
caused by particular provisions of the proposed regulations. Prior to
the effective date of these final regulations, we will provide
worksheets and software that may be used to calculate the treatment of
Title IV, HEA program funds when a student withdraws. We will provide
examples of and guidance on the applicability of the final regulations
after publication through appropriate Department publications and
training.
Changes: None.
Comments: Several commenters contended that these proposed rules
would have a negative financial impact on institutions. Several of
these commenters suggested changes to the ``50 percent discount''
requirement of Sec. 668.22(h) to alleviate some of the financial
burden. Seven of the commenters stated that, because two calculations
were now necessary, one to determine the treatment of Title IV, HEA
program funds, and one to determine earned institutional charges under
the institution's refund policy, their institution would have to expend
funds to hire additional personnel. Two of the commenters contended
that institutions would have to expend funds to purchase software in
order to perform the calculation correctly.
Discussion: To the extent that there is any financial burden, we
believe that it is due to the statutory changes made to the
requirements for determining the amount of Title IV, HEA program funds
that must be returned to the Title IV, HEA programs. Commenters' more
specific concerns with the financial implications of this rule,
including the concern that institutions will now have to perform two
calculations and comments on the ``50 percent discount,'' are discussed
in detail in the Analysis of Comments and Changes for Sec. 668.22(g)
and Sec. 668.22(h). As noted above, we will assist institutions with
the calculation of earned Title IV, HEA program funds when a student
withdraws by providing worksheets, software, and examples of the
calculation.
Changes: None.
Comments: A couple of commenters felt that the proposed rules are
unfair to clock hour institutions. One commenter, a federation
representing the professional beauty industry, believed that the rules
unfairly penalize students who attend clock hour institutions, such as
cosmetology schools. The commenter was concerned that, as a result,
students would be discouraged from pursuing cosmetology careers.
Discussion: We believe that the provisions that specifically affect
clock-hour institutions are in keeping with statutory intent. These
provisions are an attempt to recognize the manner in which clock-hour
programs operate. We have responded throughout the Analysis of Comments
and Changes to commenters' concerns in this area.
Changes: None.
Effective Date
Coments: A few commenters requested that we delay implementation of
the final rules in order to establish pilot programs to evaluate the
impact of the rules on students and institutions, and to allow
institutions the time necessary to properly implement the final
regulations. One commenter suggested that institutions that choose to
implement section 484B of the HEA prior to the required implementation
date of October 7, 2000 be used as the pilot sites. Specifically, one
of these commenters contended that the rules should be delayed because
institutions have been, and will continue to be, focused on Year 2000
(Y2K) issues, and will not be able to focus on the implementation of
the new rules. One commenter recommended that these rules be effective
for students who begin an enrollment period on or after October 7, 2000
and withdraw from the institution on or after October 7, 2000. One
commenter requested that institutions be permitted to implement early
(prior to the required effective date of October 7, 2000) one portion
of the requirements of Sec. 668.22 without having to implement the
entire requirements.
Discussion: We believe that the statutorily required implementation
date of October 7, 2000 provides institutions with sufficient time to
assess the impact of these requirements, to make any necessary
administrative and systems changes, and to notify all potentially
affected students of the changes. As these provisions of section 484B
of the HEA apply to students who withdraw from an institution, we
believe that these regulations should apply to any student who
withdraws on or after October 7, 2000, rather than to any student who
begins an enrollment period on of after that date and subsequently
withdraws. Because the provisions of section 484B of the HEA, as
revised by the 1998 Amendments, are a significant departure from the
requirements of section 484B prior to the 1998 Amendments, we do not
believe that it is reasonable to permit an institution to implement
select portions of the implementing final regulations prior to October
7, 2000. If an institution chooses to implement these final regulations
prior to October 7, 2000, it must implement them in their entirety.
[[Page 59018]]
Changes: None.
Section 668.22(a) General
Definition of a Title IV Recipient
Comments: A few commenters asked us to clarify who is a ``recipient
of Title IV grant or loan assistance'' for purposes of the requirements
for the treatment of Title IV, HEA program funds when a student
withdraws. Some of these commenters believed that a student should be
counted as a Title IV, HEA program recipient only if the student
receives a disbursement of Title IV, HEA program funds before he or she
withdraws. One commenter felt that a student should also be considered
a Title IV, HEA program recipient if the student is entitled to a late
disbursement. One commenter maintained that a student who received only
Federal Work-Study funds should not be considered a Title IV, HEA
program recipient. A couple of the commenters contend that it is hard
to identify students who withdraw if they have not received aid. One of
these commenters asserted that most institutional processing systems
identify only students who have received Title IV, HEA program
assistance and alert the financial aid or bursar office when those
students withdraw. One commenter asked whether the rules would apply to
a student who withdrew if the student had applied for a Title IV, HEA
loan, but the institution had not yet certified the loan.
Discussion: We believe that it is consistent to define a Title IV,
HEA program recipient for purposes of this section as a student who has
met the requirements of Sec. 668.164(g)(2). When a student withdraws or
makes certain other changes to his or her enrollment status, the
student is no longer eligible for a regular disbursement of Title IV,
HEA program funds. Section 668.164(g)(2) lists the conditions that must
have been met prior to such a change in enrollment status in order for
the institution to make a late disbursement. For example, for a student
to receive a Direct loan, the institution must have created the
electronic origination record for the loan; for the student to receive
a FFEL Program loan, the institution must have certified the loan. The
conditions listed in Sec. 668.164(g)(2) are also used for purposes of
determining when a post-withdrawal disbursement of Title IV, HEA funds
may be disbursed. Therefore, we have defined in the regulations a Title
IV grant or loan recipient for purposes of this section as a student
who has met the requirements of Sec. 668.164(g)(2). In keeping with
section 484B(a)(1) of the HEA, which provides that the requirements of
section 484B of the HEA are not applicable to recipients of Federal
Work-Study funds, a student would not be considered a Title IV, HEA
program recipient under this section if the only Title IV, HEA program
assistance that the student had received or could have received, was
Federal Work-Study funds. Therefore, a Title IV, HEA program recipient
for purposes of this section is a student who has met the requirements
of Sec. 668.164(g)(2).
Changes: The definition of a ``recipient of Title IV grant or loan
assistance'' has been added to Sec. 668.22(l).
LEAP Program Funds
Comments: One commenter believed that it is unfair to require an
institution to count the entire amount of Leveraging Education
Assistance Partnership (LEAP) funds in the calculation of the amount of
Title IV, HEA program assistance that a student has earned upon
withdrawal, rather than just the Federal share of the grant. The
commenter stated that their institution's State Student Aid Commission
identifies their State grant program as containing LEAP funds. The
commenter noted that the State Student Aid Commission expects the
institution to return any unearned portion of the grant, based on the
institution's refund policy, to the State. The commenter is concerned
that if the institution complies with both the requirements for the
treatment of Title IV, HEA program funds when a student withdraws and
the State's return requirements, it will end up returning more than the
original amount of the grant. One commenter supported the position that
LEAP funds that are not identified as LEAP funds do not need to be
included in the calculation of the treatment of Title IV, HEA program
funds if a student withdraws.
Discussion: Section 484B of the HEA excludes only Federal Work-
Study funds from the calculation of earned Title IV, HEA program funds
when a student withdraws. Once a State agency identifies a grant as
LEAP funds, the entire amount of the grant is considered a LEAP grant
and is subject to the Federal regulations governing the LEAP program.
Therefore, if a State agency specifically identifies a grant as LEAP
funds, the entire amount of the grant must be included in the
calculation of earned Title IV, HEA funds. This guidance is consistent
with the guidance in Dear Colleague Letter GEN-89-38. We acknowledge
that the interplay between the requirements of this section and State
requirements for the handling of LEAP funds may cause some difficulties
for institutions. We will work with the States to attempt to resolve
these difficulties.
Changes: None.
Title IV Aid Disbursed
Comments: A few commenters objected to our assertion in the
preamble to the proposed rule that a pattern or practice of inadvertent
overpayments--where an institution disbursed Title IV, HEA program
funds to a student who has withdrawn because the institution was
unaware of the student's withdrawal--would be questioned in a program
review. A few commenters contended that what we refer to as
``inadvertent overpayments'' are late disbursements and, therefore, are
permissible. The commenters believed that it is inconsistent to allow
an institution to count inadvertent overpayments as Title IV, HEA
program aid disbursed, and then sanction an institution for making the
overpayments.
One commenter felt that our assertion is inconsistent with preamble
language that ``some aspects of the withdrawal process cannot occur
until the institution is aware that the student has withdrawn.'' One
commenter believed that an institution should not be sanctioned for the
practice of disbursing funds to withdrawn students if the institution
had no evidence to the contrary that the student was still enrolled at
the time the funds were disbursed. The commenter believed that an
institution has fulfilled its obligation to ensure that a student is
eligible by looking at the institution's data to ensure that the
student is an active, current, student who meets satisfactory academic
progress and other eligibility requirements. One commenter asserted
that institutions increasingly rely on computer processing of Title IV,
HEA program funds in order to process those funds as expeditiously and
efficiently as possible. The commenter noted that if a student
withdraws from an institution without notification, there is no way to
prevent such inadvertent overpayments unless the institution takes
attendance for every class; an option that the commenter felt was
unduly burdensome. One commenter questioned how many inadvertent
overpayments would be considered a ``pattern or practice'' of making
inadvertent overpayments.
Discussion: As we noted in the preamble to the proposed rule, we
agreed to permit an institution to include inadvertent overpayments in
the calculation of total aid disbursed only for the administrative ease
of the
[[Page 59019]]
institution. Specifically, the inclusion of these inadvertent
overpayments in total aid disbursed would prevent the burden of an
institution having to return Title IV, HEA program funds, only to have
to disburse them again if a post-withdrawal disbursement was due. As
stated in the NPRM, if we were to sanction a practice of inadvertent
overpayments we would be sanctioning violations of other Title IV, HEA
program regulations that require that an institution may disburse Title
IV, HEA program funds only if the student is eligible to receive those
funds.
We note that these disbursement requirements are not new. As such,
an institution would be expected to already have had in place a
mechanism for making the necessary eligibility determinations prior to
the disbursement of any Title IV, HEA program funds, such as a process
by which withdrawals are reported immediately to those individuals at
the institution who are responsible for making Title IV, HEA program
disbursements. If an institution does not have the proper mechanisms in
place, the institution must make the necessary changes to the way it
currently disburses Title IV, HEA program funds to come into
compliance.
We do not agree with the commenters who believe that these
inadvertent overpayments are legitimate late disbursements. We note
that these overpayments are not late disbursements either; late
disbursements are made in accordance with specific regulatory
requirements after the institution is aware that the student has
withdrawn.
We do not believe that it is appropriate to define a set number or
percentage of inadvertent overpayments that would constitute a pattern
or practice of making inadvertent overpayments. The determination of a
pattern or practice must be made in conjunction with an assessment of a
specific institution's demonstrated willingness and ability to prevent
inadvertent overpayments.
Changes: None.
Comments: A couple of commenters believed that institutions should
be permitted to replace a withdrawn student's Title IV, HEA loan funds
with Title IV, HEA grant funds that the student was otherwise eligible
to receive before performing the calculation for the treatment of Title
IV, HEA program funds when a student withdraws. The commenters felt
that it is always in the best interest of the student and the Federal
government to reduce student indebtedness, particularly for students
who have not completed their education.
Discussion: We continue to believe that it is inappropriate for an
institution to disburse Title IV, HEA program funds to a student who
has withdrawn unless the institution has determined under these
regulations that the student has earned more funds than were disbursed.
Therefore, an institution may not alter the amounts of Title IV, HEA
grant and loan funds that were disbursed prior to the institution's
determination that the student withdrew.
Changes: None.
Post-Withdrawal Disbursements
Comments: Some commenters confused the requirements for late
disbursements that are made to students who have withdrawn from an
institution with the late disbursements requirements that regulate how
and when late disbursements are made to students for other reasons,
such as a change in enrollment status to less than half-time.
Discussion: We believe that this confusion may be alleviated if
disbursements that are made to students who have withdrawn from an
institution are referred to as ``post-withdrawal disbursements,''
rather than ``late disbursements.''
Changes: References to ``late disbursements'' have been changed to
``post-withdrawal disbursements'' where appropriate.
Comments: Several commenters did not believe that Title IV, HEA
program funds should be disbursed directly to a student who has
withdrawn. Some of these commenters did not believe that this was the
intent of Congress. In particular, many of these commenters did not
believe that it was ever appropriate to disburse Title IV, HEA program
funds to a withdrawn student if the student owed any money to the
institution.
Several of the commenters specifically questioned whether an
institution must disburse a post-withdrawal disbursement check if a
student no longer has any institutional charges. One commenter asserted
that disbursements to withdrawn students will result in Title IV, HEA
funds being used for noneducationally-related expenses. A few
commenters believed that direct disbursements of loans to withdrawn
students would imprudently increase a withdrawn student's indebtedness
and chance of default. To mitigate this, and to reduce institutional
burden, a few commenters recommended that an institution be permitted
to determine when a post-withdrawal disbursement of Title IV, HEA
program funds should be disbursed directly to a student.
A few commenters believed that the existing late disbursement
regulations should be used instead of the proposed rules for post-
withdrawal disbursements. One commenter suggested that earned Title IV,
HEA program funds in excess of money owed to the institution should be
used to reduce any Title IV, HEA program loan debt of the student.
Another commenter alleged that the post-withdrawal disbursement
requirements conflict with other statutory requirements that allow the
institution to be the custodian of the Title IV, HEA program funds and
control whether late disbursements are made and how they are used.
Discussion: We believe that the commenters' contention that it was
not the intent of Congress to directly provide withdrawn students with
earned Title IV, HEA program funds is unfounded. Section 484B(a)(4)(A)
of the HEA requires that disbursements of earned funds be provided to a
student if the student has received less grant or loan assistance than
the amount he or she has earned. The statute does not require that the
disbursement of earned aid can only be applied to unpaid charges at the
institution. As stated in the preamble to the NPRM, the determination
of the amount of Title IV, HEA program assistance that the student has
earned has no relationship to a student's actual incurred educational
costs. The amount of earned Title IV, HEA program funds is based on the
amount of time that the student spent in attendance and is a
determination of aid that is earned by the student, not money earned by
the institution. Therefore, we believe that it would be in direct
violation of the statute to permit an institution to decrease this
amount.
We continue to believe that it is appropriate to be consistent with
the cash management requirements for disbursing Title IV, HEA program
funds, which do not permit an institution to credit a student's account
with Title IV, HEA program funds other than for tuition, fees, and room
and board (if the student contracts with the institution)--without the
student's permission. If an institution does not have permission from
the student (or parent for a PLUS loan) prior to the student's
withdrawal and does not obtain that permission after the student's
withdrawal, the undisbursed earned funds must be offered to the student
and cannot be used by the institution to pay remaining institutional
charges other than for tuition, fees, and room and board (if the
student contracts with the institution).
Changes: None.
[[Page 59020]]
Comments: A few commenters felt that the proposed post-withdrawal
disbursement procedures are too burdensome and costly for institutions
to implement. One commenter noted that it would be impossible to
process a post-withdrawal disbursement in a timely manner for a student
when the institution cannot locate the student immediately. The
commenter suggested that it would be less burdensome to permit an
institution to credit a student's account with earned Title IV, HEA
program funds for current charges for educationally-related activities
other than tuition, fees, and room and board (if the student contracts
with the institution) unless the student or parent specifically denied
permission to the institution within a certain number of days. One
commenter supported the proposed timeframes for notification, response
to, and disbursement of post-withdrawal disbursements. Two commenters
agreed that 90 days after the date of the institution's determination
that the student withdrew was an appropriate amount of time for
institutions to have to make any accepted post-withdrawal disbursements
to a student (or parent for a PLUS loan). A couple of commenters felt
that it was unreasonably burdensome to require institutions to notify a
student or parent of the outcome of any post-withdrawal disbursement
request if the student's or parent's authorization was not received at
all, or was not received within the 14 day timeframe. One of the
commenters thought that this second notification that simply restated
that the student had lost the opportunity to accept a post-withdrawal
disbursement would be confusing to a student who had never responded to
the original notification. A couple of commenters applauded our
determination that a single notification could be used for all of the
notification requirements for post-withdrawal disbursements, except for
the institution's notification to inform the student or parent
electronically or in writing concerning the outcome of any post-
withdrawal disbursement request.
Discussion: The statute requires that earned funds be provided to
the student. We recognize that it may be difficult to locate a student
who has left the institution. This was addressed in negotiated
rulemaking and it was concluded that the requirements for making a
post-withdrawal disbursement to a student provide that the institution
must offer in writing to the student (or parent for PLUS loan funds)
any amount of a post-withdrawal disbursement that is not credited to
the student's account. If a response is not received from the student
or parent, is not received within the permitted timeframe, or the
student declines the funds, the institution would return any earned
funds that the institution was holding to the Title IV, HEA programs.
As stated previously in the Analysis of Comments and Changes, we
continue to believe that it is appropriate to be consistent with the
cash management requirements for disbursing Title IV, HEA program
funds, which do not permit an institution to credit a student's account
with Title IV, HEA program funds for current charges for educationally-
related activities--other than tuition, fees, and room and board (if
the student contracts with the institution)--without the student's
permission.
We agree with the commenters who believe that it is sometimes
unreasonably burdensome or redundant to require institutions to notify
a student or parent of the outcome of any post-withdrawal disbursement
request. Therefore, if an authorization from the student (or parent for
a PLUS loan) is never received, or if the post-withdrawal disbursement
is accepted, the institution does not need to notify the student of the
outcome of the post-withdrawal disbursement request. Presumably, a
student (or parent for PLUS loan funds) who has never responded will
understand that the post-withdrawal disbursement will not be made.
Further, a student (or parent for PLUS loan funds) who has accepted the
funds will likely understand that the amount of the post-withdrawal
disbursement that he or she accepts will be provided, and any
unaccepted amount will be returned. However, in the case of a student
(or parent for PLUS loan funds) whose acceptance was not received
within the 14 day timeframe and the institution does not otherwise
choose to make the post-withdrawal disbursement, the student (or parent
for a PLUS loan) may assume incorrectly that his or her acceptance of a
post-withdrawal disbursement has been received within the timeframe and
that the post-withdrawal disbursement will be made. Therefore, if a
student's (or parent's for PLUS loan funds) acceptance was not received
within the 14 day timeframe and the institution does not otherwise
choose to make the post-withdrawal disbursement, the institution must
notify the student (or parent for PLUS loan funds) that the post-
withdrawal disbursement will not be made and why.
Changes: Section 668.22(a)(4)(ii)(E) has been changed to reflect
that an institution must notify a student (or parent for PLUS loan
funds) if the student's (or parent's for PLUS loan funds) acceptance
was received after the 14 day timeframe and the institution does not
otherwise choose to make the post-withdrawal disbursement.
Comments: Several commenters questioned how an institution could
verify the identity of the person claiming to be the student or parent
if the student or parent calls the institution to accept earned Title
IV, HEA program funds. Several commenters recommended that an
institution be allowed to refuse to mail a check of earned Title IV,
HEA program funds based on a phone call requesting that the check be
sent to a particular address. A few commenters questioned whether the
institution could insist that a student or parent come into the
institution to pick up any post-withdrawal disbursements due.
Discussion: Obviously, we would not want an institution to disburse
Title IV, HEA program funds to anyone other than the intended
recipient. We do not regulate how an institution should ensure that
Title IV, HEA program funds are disbursed to the proper individual.
However, we do not believe that it would be reasonable to require a
student who has withdrawn from an institution (or a parent of such a
student, for PLUS loan funds) to pick up a post-withdrawal disbursement
in person. Because the student is no longer attending the institution,
it would not be unlikely that the student has moved out of the area and
would not be able to return to the institution to pick up a post-
withdrawal disbursement. Presumably, in the scenario presented by the
commenters, the student or parent is calling in response to the
notification the institution mailed to the student or parent about the
funds available from a post-withdrawal disbursement. We believe that it
is reasonable to assume that a check mailed to the same address will
reach the proper party.
Changes: None.
Comments: A few commenters felt that post-withdrawal disbursements
should be available to pay prior year charges. The commenters
maintained that this would meet the intent of the negotiating committee
to mirror the cash management rules as closely as possible.
Discussion: We agree that it is desirable to mirror the cash
management regulations as closely as possible. Therefore, we agree that
an institution should be allowed to credit a student's account for
minor prior award year charges. Institutions should make every effort
to explain to a student that all or a portion of his or her post-
withdrawal disbursement has been used
[[Page 59021]]
to satisfy any charges from prior award years.
Changes: Section 668.22(a)(4)(i)(A) has been amended to permit an
institution to credit a student's account to pay minor prior year
charges in accordance with Sec. 668.164(d)(2)(ii).
Comments: One commenter maintained that the requirement that an
institution must offer a post-withdrawal disbursement to a student
within 30 days of the date that the institution determines that the
student withdrew is inconsistent with regulations that require an
institution to disburse loans within three business days of the
institution's receipt of the funds.
Discussion: Because an institution must disburse Title IV, HEA
program funds as soon as possible, but no later than three business
days after receipt of the funds, we believe that in most cases, an
institution will not possess undisbursed funds for a student as of the
date that the institution determines that the student withdrew. An
institution should not request Title IV, HEA program funds for a post-
withdrawal disbursement unless and until it has determined: (1) That a
post-withdrawal disbursement is due, (2) the amount of the post-
withdrawal disbursement, and (3) that the post-withdrawal disbursement
can be disbursed within three business days of receipt.
Changes: None.
Section 668.22(b) Withdrawal Date for a Student Who Withdraws From an
Institution That Is Required To Take Attendance
General Withdrawal Issues
Comments: A few commenters asserted that the provisions in the NPRM
for determining a student's withdrawal date favor institutions that do
not take attendance. In particular, a couple of commenters noted that,
because of the difference in requirements for determining withdrawal
dates for institutions that do not take attendance, in some
circumstances, two students who cease attendance on the same day, one
at an institution that is required to take attendance and one at an
institution that is not required to take attendance, may have different
withdrawal dates. The commenters noted that this would result in the
students earning different amounts of Title IV, HEA program aid. The
commenters believed that the NPRM will encourage institutions that do
take attendance to stop taking it, which the commenters felt would be
harmful to students. One commenter thought that it was particularly
unfair for students who withdraw without notification from institutions
that are not required to take attendance to earn 50 percent of their
Title IV, HEA program aid.
Discussion: The provisions that the commenters referred to are
those that are prescribed by the statute. Extending the provisions in
the statute that apply to institutions that are not required to take
attendance to institutions that are required to take attendance would
not be permitted under the law.
Changes: None.
Comments: Some commenters questioned how an institution would
determine a student's withdrawal date if the student withdrew from
some, but not all of his or her classes.
Discussion: The provisions of section 484B of the HEA and these
implementing regulations apply to a student who began attending an
institution and withdrew from all classes at the institution. They do
not apply to a student who withdraws from some classes but continues to
be enrolled in other classes, or a to student who leaves an institution
prior to the student's first day of class.
Changes: None.
Required To Take Attendance
Comments: Several commenters asked for clarification of the
definition of an institution that is required to take attendance for
purposes of this section. A few commenters supported the position in
the NPRM that an institution that opts to take attendance would not be
considered an institution that is required to take attendance for Title
IV, HEA program purposes. One commenter believed that all institutions
that are required to take attendance, whether required by an outside
entity or not, should be considered institutions that are required to
take attendance for Title IV, HEA purposes.
A few commenters asked if an institution must use attendance
records to determine a student's withdrawal date if the institution is
not required to take attendance, but some faculty members do take
attendance. One commenter asked if an institution would be considered
an institution that is required to take attendance if the institution's
State licensing agency or accrediting agency provided institutions with
the option of taking attendance and the institution opts to take
attendance. One commenter wanted to know if an institution would be
considered to be required to take attendance by an outside entity if
the institution's State licensing agency does not directly require an
institution to take attendance, but requires the institution to track
students, so in effect, the institution has to take attendance. For
example, the commenter noted that some institutions are required to
follow the State agency's refund policy regulations which require the
institution to refund tuition and fees based on the student's last date
of class attendance. The commenter also provided the example of an
institution's State licensing agency regulations that require the
institution to drop a student if the student misses more than a certain
number of days or hours in a term.
Two commenters believed that an institution's State licensing
agency and accrediting agency should be considered the only outside
entities that can require the institution to take attendance for
purposes of the treatment of Title IV, HEA program funds when a student
withdraws. Some commenters asked what requirements would apply for
determining a student's withdrawal date if an institution is required
to take attendance by an outside entity, such as the Department of
Veterans Affairs, that requires the institution to take attendance for
recipients of the entity's assistance only.
Discussion: We believe that only an institution that is required to
take attendance by an outside entity should be considered an
institution that is required to take attendance for purposes of
determining a student's withdrawal date. Therefore, an institution that
elects to take attendance, including an institution that voluntarily
complies with an optional attendance requirement of an outside entity,
would not be considered an institution that is required to take
attendance. However, we believe that if any requirements of an outside
entity result in an institution having to take attendance, the
institution would be considered an institution that is required to take
attendance for purposes of determining a student's withdrawal date. So,
in the two examples provided by the commenter (one where the state
agency requires the institution to refund tuition and fees based on the
student's last date of class attendance and the other where state
agency regulations require the institution to drop a student if the
student misses more than a certain number of days or hours in a term)
the institution would be considered an institution that is required to
take attendance for purposes of determining a student's withdrawal
date.
We do not agree that State licensing agencies and accrediting
agencies should be considered the only outside entities that can
require the institution to take attendance for purposes of the
treatment of Title IV, HEA program funds when a student withdraws. We
[[Page 59022]]
believe that if an institution has attendance records as the result of
the requirements of any outside entity, those attendance records must
be used to determine a student's withdrawal date. We also believe that
if an institution is required to take attendance for only some students
by an outside entity, the institution must use those attendance records
for only those students to determine the student's withdrawal date (the
last date of academic attendance). The institution would not be
required to take attendance for any of its other students, or to use
attendance records to determine any of its other students' withdrawal
dates, unless the institution is required to take attendance for those
students by another outside entity. For example, 10 students at Peabody
University receive assistance from the Veterans Administration (VA).
The VA requires the institution to take attendance for the recipients
of the VA education benefits. Peabody University is not required by any
other outside entity to take attendance for any of its other students.
Seven of the 10 students who receive VA benefits are also Title IV, HEA
program recipients. If any of those seven students withdraw from the
institution, the institution must use the VA required attendance
records for those students. For all other Title IV, HEA program
recipients at Peabody University that withdraw, the institution must
determine the withdrawal date in accordance with the requirements for
students who withdraw from an institution that is not required to take
attendance (Sec. 668.22(c)). We believe that requiring an institution
to use its attendance records to determine the withdrawal date of a
student for which another outside entity requires that attendance be
taken is consistent with our view 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 should be
based on the best information available.
Changes: We have changed Sec. 668.22(b)(3) to clarify that if an
institution is required by an outside entity to take attendance for
only some of its students, the institution must use those attendance
records for those students to determine the withdrawal date.
Comments: Several of the commenters asked what an institution's
official attendance record would be. The commenters noted that an
institution may have a master attendance record in addition to the roll
books kept by the instructors. Several commenters asked how an
institution would determine a student's withdrawal date if one of the
student's instructors took attendance, but the others did not. A couple
of commenters wanted to know how to determine a student's withdrawal
date if faculty members' attendance records differed.
Discussion: If an institution is required to take attendance, it is
up to institution to ensure that accurate attendance records are kept
for purposes of identifying a student's last date of academic
attendance. An institution must also determine which attendance records
most accurately support its determination of a student's withdrawal
date and support its use of one date over another if the institution
has conflicting information.
Changes: None.
Comments: One commenter agreed that the withdrawal date for a
student who withdraws from an institution that is required to take
attendance should be the last date of academic attendance. A couple of
commenters believed that an institution should have the discretion to
use a student's last date of academic attendance as the basis for
determining the students withdrawal date, rather than as the actual
withdrawal date.
One commenter asserted that Title IV, HEA program assistance earned
is not a reflection of time in academic attendance but, rather, is a
reflection of institutional costs. As such, the commenter believed that
the student's withdrawal date should reflect that the costs are
incurred by the student after the student's last date of academic
attendance. The commenter stated that using as a student's withdrawal
date a point beyond the student's last date of attendance would be
consistent with some institutional policies. The commenter contended
that Congress did not intend that a student's withdrawal date at an
institution that is required to take attendance be limited to the last
date of academic attendance.
One commenter believed that an institution that is required to take
attendance should be allowed to use as a student's withdrawal date the
student's last date of attendance at an academically-related activity
as documented by the institution. The commenter believed that it would
be unfair to allow institutions that are not required to take
attendance to count a student's subsequent academic activity, while not
extending this option to institutions that are required to take
attendance.
A couple of commenters also maintained that the provision for
institutions that are not required to take attendance that provides
that the withdrawal date for a student that withdrew without
notification is the midpoint of the payment period or period of
enrollment, should be extended to institutions that are required to
take attendance. One commenter noted that this extension may be
necessary if an institution that is required to take attendance has a
student who takes a portion of their program at an institution that is
not required to take attendance under a consortium agreement. The
commenter believed that if the student withdrew from the non-attendance
taking institution without providing notification, the student's
withdrawal date should be the midpoint of the payment period or period
of enrollment.
Discussion: Section 484B(c)(1)(B) of the HEA provides that
institutions that are required to take attendance must determine a
student's withdrawal date from its attendance records. We believe that
the interpretation of the statute that is most in line with our goal of
determining the date that most accurately reflects the point when a
student ceased academic attendance defines a student's withdrawal date
as the last date of academic attendance, as determined by the
institution from its attendance records. We note that if a student
continues to reside at the institution and consume goods and services
past this point, the institution is not precluded from charging the
student for these expenses. We believe that the statute makes clear
that an institution that is required to take attendance and, therefore,
has an established mechanism for tracking a student's attendance, must
use that mechanism to determine the point when the student ceased
academic attendance. We believe that a student's last date of academic
attendance, as determined by the institution from its attendance
records, accurately reflects the point when a student ceased academic
attendance. The option of using a last date of attendance at an
academically-related activity as documented by the institution has been
extended to institutions that do not take attendance in order to permit
the institutions to meet more precisely the goal of identifying as
accurately as possible the point when the student ceased academic
attendance.
The statute does not permit an institution that is required to take
attendance to use the midpoint of the payment period or period of
enrollment as the withdrawal date for a student that withdrew without
notification. In the case of a student who is attending both an
institution that is required to take attendance and an institution that
is not
[[Page 59023]]
required to take attendance through a consortium agreement, in
accordance with Sec. 600.9 of the Institutional Eligibility regulations
and Sec. 690.9 of the Federal Pell Grant Program regulations, the
institutions must specify as part of the consortium agreement which
institution will handle the administration of Title IV, HEA program
funds, which would include the determination of Title IV, HEA program
funds earned by students upon withdrawal. The designated institution
must take on all aspects of the administration of Title IV, HEA program
funds.
Changes: None.
Comments: A few commenters believed that institutions that take
attendance for only a short period of time should be considered
institutions that are required to take attendance for Title IV, HEA
purposes. Some of these commenters believed that if other agencies can
require attendance for specific periods for their purposes, so can the
Department. A few commenters supported the position taken in the NPRM
that an institution that is required to take attendance for a portion
of the payment period or period of enrollment should not be considered
an institution that is required to take attendance for Title IV, HEA
purposes. One of these commenters contended that attendance records
that are kept for census purposes would not be appropriate for
determining a student's withdrawal date for Title IV, HEA purposes.
Discussion: Although we believe that in some instances, the use of
attendance records for an institution that is required to take
attendance for a portion of the payment period or period of enrollment
may meet our goal of using the best date available, we understand that
in other instances, these records may not be appropriate for
determining a student's withdrawal date.
Changes: None.
Comments: Some commenters believe that it would be unfair to use
the student's last date of academic attendance as the withdrawal date
for a student that does not return from an approved leave of absence.
Discussion: This issue is discussed under the Analysis of Comments
and Changes for Sec. 668.22(c).
Changes: None.
Section 668.22(c) Withdrawal Date for a Student Who Withdraws From an
Institution That Is Not Required To Take Attendance
Official Notification
Comments: Several commenters asked for clarification of the meaning
of ``intent to withdraw.'' The commenters wanted to know if a student
who is only discussing and exploring the option of withdrawing would be
considered a student who is providing the institution with his or her
intent to withdraw. A couple of commenters suggested that only written
submissions from the student specifying that the student intended to
withdraw should be accepted. One of the commenters felt that oral
notifications should not be allowed because they are subject to
disagreement over what was said and when it was said. The commenter
also believed that oral notifications are subject to abuse because an
individual other than the student could phone the institution and
withdraw the student.
Several commenters wanted to know if a student would be considered
to have provided official notification to the institution of the
student's intent to withdraw if a student runs into an employee of the
designated office for official notification of intent to withdraw out
in the community and mentions that they might not be returning to
school.
A few commenters did not believe that the date that a student
notifies the institution of his or her intent to withdraw is an
accurate withdrawal date for a student who never actually withdraws,
for a student who does not withdraw until a future date, or for a
student who ceased attendance prior to the notification. One commenter
suggested that an institution be permitted to use the earlier of the
last date of class attendance as certified by the student, or the date
the student officially submits paperwork to begin the withdrawal
process.
One commenter supported the position taken in the NPRM that an
institution may designate the office or offices that a student must
notify in order for the notification to count as official notification.
Discussion: Intent to withdraw, as provided for in section
484B(c)(1)(A) of the HEA, means that the student indicates that he or
she has either ceased to attend the institution and does not plan to
resume academic attendance, or believes at the time he or she provides
notification that he or she will cease to attend the institution. A
student who contacts an institution and only requests information on
aspects of the withdrawal process, such as the potential consequences
of withdrawal, would not be considered a student who is indicating that
he or she plans to withdraw. However, if the student indicates that he
or she is requesting the information because he or she plans to cease
attendance, the student would be considered to have provided official
notification of his or her intent to withdraw.
At negotiated rulemaking, it was discussed and understood that
notification of intent to withdraw that a student provided orally would
be sufficient. We believe that a student's oral notification to an
institution is a legitimate means of communicating to the institution
his or her intent to withdraw. We believe that requiring all students
to provide a written notice of intent to withdraw would unfairly limit
and possibly delay notifications of withdrawal. The responsibility for
documenting oral notifications is the institution's; however, the
institution may request, but not require, that the student confirm his
or her oral notification in writing.
Official notification of intent to withdraw is notice that a
student provides to an office designated by the institution. If a
student provides notification to an employee of that office while that
person is acting in his or her official capacity, the student has
provided official notification. If the student provides notification to
an employee of that office while that person is not acting in his or
her official capacity, we would expect the employee to inform the
student of the appropriate means for providing official notification of
his or her intent to withdraw.
The statute provides that the withdrawal date for a student who
withdraws by providing notification to an institution that is not
required to take attendance is the date that the student began the
institution's withdrawal process or otherwise provided official
notification of his or her intent to withdraw. Although stated in the
NPRM, we believe that it is important to emphasize that an institution
that is not required to take attendance may always use a last date of
attendance at an academically-related activity as a student's
withdrawal date. Therefore, if a student begins the institution's
withdrawal process or notifies the institution of his or her intent to
withdraw and continues to attend the institution before actually
withdrawing, the attendance subsequent to the student's notification
may be taken into account by the documentation of a last date of
attendance at an academically-related activity. Likewise, an
institution could use an earlier last documented date of attendance at
an academically-related activity if this date is a more accurate
reflection of the student's withdrawal date than the date that the
student begins the institution's withdrawal process or notifies the
institution of his or her intent to
[[Page 59024]]
withdraw. We would also like to emphasize that the requirements of
these regulations for the treatment of Title IV, HEA program funds when
a student withdraws do not apply to a student who does not actually
cease attendance at the institution.
Section 484B(c) of the HEA makes clear that the determination of a
student's withdrawal date is the responsibility of the institution.
Therefore, the institution, not the student, must document a student's
attendance at an academically-related activity in order to be able to
use the date of that attendance as the student's withdrawal date. A
student's certification of attendance that is not supported by
documentation by the institution would not be acceptable documentation
of the student's last date of attendance at an academically-related
activity.
Changes: We have changed Sec. 668.22(c)(1)(ii) to make clear that a
student has provided official notification to the institution of his or
her intent to withdraw if the student indicates an intent in writing or
orally.
Resolving Instances Where a Student Triggers Two Dates
Comments: One commenter believed that it is unnecessary to define
the withdrawal date for a student that both begins the institution's
withdrawal process and also provides official notification to the
institution of his or her intent to withdraw, as the earlier of these
two dates, because a student cannot otherwise provide official
notification to the institution without having already begun the
institution's withdrawal process.
Discussion: The commenter's assertion that a student cannot
otherwise provide official notification to the institution without
having already begun the institution's withdrawal process is incorrect.
The example given in the preamble to the NPRM illustrates one scenario
where a student may otherwise provide official notification to the
institution prior to beginning the institution's withdrawal process. In
that example, a student calls the institution's designated office and
states his or her intent to withdraw on November 1. On December 1, the
student begins the institution's withdrawal process by submitting a
withdrawal form.
Changes: None.
Withdrawals Without Notification
Comments: One commenter believed that use of the midpoint as the
withdrawal date for a student who does not begin the institution's
withdrawal process or otherwise provide official notification to the
institution of his or her intent to withdraw penalizes students who
provide notification of withdrawal. The commenter asserted that this
provision provides students with an incentive to leave without
notification, which will only add to the institution's administrative
burden. The commenter believed that the withdrawal date for an
unofficial withdrawal should be the student's last date of attendance
or the date of the last homework assignment submitted by the student.
One commenter contended that an institution cannot determine until
the end of the term that a student has really dropped out because the
student would always have the right to return. A couple of commenters
maintained that there is no reliable way to determine that a student
has dropped out of the institution. For example, one commenter noted
that all failing grades for a student would not necessarily mean that
the student stopped attending. The commenter questioned how a program
reviewer would identify students that have dropped out of the
institution. Another commenter believed that other institutions often
conclude that some students have completed a semester even though the
students may have transferred to another institution. The commenter
believed that the add-drop periods established by the institution could
be used to more fairly interpret when students withdrew.
Discussion: Section 484B(c)(1)(iii) of the HEA provides that the
withdrawal date for a student who does not begin the institution's
withdrawal process or otherwise provide official notification to the
institution of his or her intent to withdraw is the midpoint of the
period for which assistance was disbursed. However, these regulations
provide that an institution may always use an earlier or later last
date of attendance at an academically-related activity as the student's
withdrawal date.
It is the responsibility of the institution to develop a mechanism
for determining whether a student who is a recipient of Title IV, HEA
grant or loan funds has ceased attendance without notification during a
payment period or period of enrollment. The requirement that an
institution identify students that have dropped out of the institution
during a payment period or period of enrollment is not new. Under the
Title IV, HEA refund requirements an institution has been required to
identify drop outs. Among other things, a reviewer may look to see if
an institution has a mechanism in place for identifying and resolving
instances where attendance through the end of the period could not be
confirmed for a student. These regulations provide institutions with
flexibility to establish their own add-drop periods and institutional
refund policies. The basis for measuring the amount the student earns
is the student's attendance, and the law requires that the funds be
earned on a pro-rata basis through the 60 percent point of the payment
period or period of enrollment.
Changes: None.
Student Does Not Return From an Approved Leave of Absence
Comments: A few commenters believed that, for a student who does
not return from an approved leave of absence, the institution should be
able to use the scheduled return date as the student's withdrawal date,
rather than the date that the student began the leave of absence (for a
student who withdraws from an institution that is not required to take
attendance) or the last date of academic attendance as determined by
the institution from its attendance records (for a student who
withdraws from an institution that is required to take attendance). One
commenter felt that the withdrawal date should be the date of the
institution's determination of the student's withdrawal. One commenter
contended that the law states that the student's withdrawal date is the
date that the student withdrew; therefore, for a student who notifies
the institution that he or she will not be returning to the
institution, the date of the student's notification should be the
withdrawal date.
A few commenters were concerned that the withdrawal date for a
student who does not return at the expiration of an approved leave of
absence as proposed in the NPRM would penalize students and
institutions if the student was a Title IV, HEA program loan recipient.
The commenters noted that if a student had been granted the full 180
days for an approved leave of absence, the student will have exhausted
all of his or her grace period and will be required to begin repayment
of the loan immediately, which would increase the likelihood that the
student would default.
A couple of commenters contended that the proposed withdrawal date
will not provide institutions with enough time to comply with the
requirements for the treatment of Title IV, HEA program funds when a
student withdraws within the required timeframes. One commenter noted
that when a student does not return from an approved leave of absence,
the institution would like the opportunity
[[Page 59025]]
to work with the student to properly prepare them for repayment.
Discussion: We do not agree with the commenters' suggested
alternative withdrawal dates for a student who does not return from an
approved leave of absence because we continue to believe that the date
that best reflects the point when the student ceased academic
attendance for this student is the date that the student began the
leave of absence (for a student who withdraws from an institution that
is not required to take attendance) or the last date of academic
attendance as determined by the institution from its attendance records
(for a student who withdraws from an institution that is required to
take attendance).
Section 484B(a)(2)(B) of the HEA states that the withdrawal date
for a student who does not return to the institution at the expiration
of an approved leave of absence is the withdrawal date as determined in
accordance with section 484B(c). However, section 484B(c) does not
specifically address the circumstance of a student who does not return
to the institution at the expiration of an approved leave of absence.
Therefore, as noted in the NPRM, we have promulgated the withdrawal
date that we believe best meets our goal to accurately reflects the
point when the student ceased attendance by treating the start of the
leave of absence as a withdrawal date documented by the institution.
We acknowledge that this withdrawal date will result in the
exhaustion of some or all of a student's grace period for Title IV, HEA
program loan recipients. We believe this is an appropriate result
because the student was not in academic attendance for that period.
However, we note that a student who has exhausted his or her grace
period and is unable to begin repayment of a loan may apply for a
deferment or forbearance of payment. Taking into account the concerns
of the commenters, we believe that a student must be informed of the
possible consequences of withdrawal on a loan grace period before he or
she is granted an approved leave of absence. Therefore, we have changed
these regulations to require an institution to provide information to a
loan recipient prior to the granting of a leave of absence about the
possible effects that the student's failure to return from the leave of
absence may have on the student's loan repayment terms. These issues
related to a student's Title IV, HEA program loan repayment status when
the student does not return from an approved leave of absence are
discussed in more detail in the Analysis of Comments and Changes for
Sec. 668.22(d).
We note that the timeframes and requirements for the handling of
post-withdrawal disbursements, maintaining documentation of a student's
withdrawal, and returning Title IV, HEA program funds for which the
institution is responsible all begin as of the date of the
institution's determination that the student withdrew, not as of the
student's withdrawal date. Therefore, the withdrawal date for a student
should have no effect on an institution's ability to meet these
requirements and deadlines.
Changes: Section 668.22(d)(1) has been changed to provide that a
leave of absence is not an approved leave of absence for purposes of
the Title IV, HEA programs unless the institution explains at or prior
to granting the leave of absence the effects that the student's failure
to return from an approved leave of absence may have on the student
loan repayment terms, including the exhaustion of some or all of the
student's grace period.
Unapproved Leave of Absence
Comments: One commenter contended that there would never be any
unapproved leaves of absence because a leave of absence would not be
allowed unless it is approved by the institution. One commenter
believed that a withdrawal that results because a student is granted an
unapproved leave of absence should be treated as a withdrawal without
official notification so that the student's withdrawal date would be
the midpoint of the payment period or period of enrollment.
Discussion: We would like to make clear that an institution may
grant a student for academic reasons a leave of absence that does not
meet the conditions of these regulations for an ``approved'' leave of
absence. However, this ``unapproved'' leave of absence must be treated
as a withdrawal for Title IV, HEA purposes. We do not agree that a
student who is granted an unapproved leave of absence should be treated
as an unofficial withdrawal. An unofficial withdrawal is one where the
institution has not received notice from the student that the student
has ceased or will cease attending the institution. If an institution
has granted a student an unapproved leave of absence, the institution
would be aware of when the student will cease attendance. In keeping
with our stated goal of identifying the date that most accurately
reflects the point when the student ceased academic attendance, we have
defined the withdrawal date for a student who takes an unapproved leave
of absence at an institution that is not required to take attendance as
the date that the institution determines that the student began the
leave of absence. The withdrawal date at an institution that is
required to take attendance is the last date of academic attendance as
determined by the institution from its attendance records. We have also
added a conforming change to define the date of the institution's
determination that the student withdrew for a student who is granted an
unapproved leave of absence as the first day of the student's leave of
absence.
Changes: We have amended Secs. 668.22(b)(1) and (c)(1)(vi) to
specify the withdrawal date for a student who takes an unapproved leave
of absence at an institution that is required to take attendance and at
an institution that is not required to take attendance, respectively.
We have added Sec. 668.22(l)(3)(v) to define the date of the
institution's determination that the student withdrew for a student who
takes an unapproved leave of absence.
Rescission of Intent To Withdraw
Comments: A few commenters did not agree that the withdrawal date
for a student who withdraws from an institution after rescinding an
intent to withdraw should be the date that the student first provided
notification to the institution or began the withdrawal process, unless
the institution chooses to document a last date of attendance at an
academically-related activity. A couple of commenters believed that an
intent to withdraw that is rescinded is completely cancelled and cannot
be referred to again. The commenters maintain that the appropriate
withdrawal date would be the date that the student subsequently
notifies the institution and actually withdraws. One commenter was
unhappy about our insinuation that an institution may abuse this area.
The commenter felt that the institution is being held responsible for
the student's actions. A couple of the commenters contended that the
original date of the student's notification was not an accurate
withdrawal date because it does not take into account the additional
charges that the student has incurred for the additional period of
attendance. One commenter asserted that it would be difficult to get a
written statement from the student that indicated that he or she will
remain in attendance. One commenter believed that the proposed
requirements for handling rescissions of withdrawal notices are too
complicated and penalize the student for deciding to remain enrolled.
[[Page 59026]]
Discussion: We continue to believe that the appropriate withdrawal
date for a student who does not complete the payment period or period
of enrollment after rescinding his or her first notification of
withdrawal is the date when the student first began the institution's
withdrawal process or otherwise provided official notification to the
institution. The Department is responsible for identifying and
responding to areas of potential abuse to the Title IV, HEA programs in
the development of regulations. The potential abuses that we identified
in the NPRM were not addressed by the alternative withdrawal dates
suggested by the commenters. We do not believe that this requirement is
onerous because an institution may always use the last date of
attendance at an academically-related activity to take into account
attendance by the student subsequent to the student's first
notification of withdrawal. For example, Dave notifies his institution
of his intent to withdraw on January 5. On January 6, Dave notifies the
institution that he has changed his mind and has decided to continue to
attend the institution, and provides the required written statement to
that effect. On February 15, Dave notifies the institution that he is
withdrawing, and actually does. The institution has a record of an exam
that Dave took on February 9. The institution may use February 9 as
Dave's withdrawal date. If the institution could not or did not choose
to document a last date of attendance at an academically-related
activity for Dave (in this case, the record of the exam), his
withdrawal date would be January 5, the date of Dave's original
notification of his intent to withdraw, not February 15.
We do not believe that it will be unduly burdensome for an
institution to obtain a statement from the student that he or she
intends to remain in academic attendance for the remainder of the
payment period or period of enrollment. Presumably, the institution is
aware that the student has changed his or her mind about withdrawing
because the student has contacted the institution to inform the
institution that he or she has changed his or her mind and are not
withdrawing. The institution may inform the student of the
certification requirement at that time.
Changes: None.
Last Date of Attendance at an Academically-Related Activity
Comments: One commenter contended that the law makes no mention of
a last date of attendance or academically-related activities, so the
regulations should only use the language of the law which states that a
later date documented by the institution may be used for a student who
withdraws without notification to the institution. The commenter did
not agree that the concept of using the last date of attendance at an
academically-related activity is a longstanding one for the Title IV,
HEA programs because it has never been included in previous laws and
was only introduced in the regulations about eight years ago. One
commenter requested clarification of the documentation required to
verify a student's attendance at an academically-related activity. One
commenter contended that using the last date of attendance at an
academically-related activity is not a realistic option because it is
difficult for an institution to track attendance.
Discussion: As stated in the preamble to the NPRM, the statute does
not specifically allow an institution to use as a withdrawal date a
student's last date of attendance at an academically-related activity,
except in the case of a student who withdraws without providing
notification (in which case the institution may use a date that is
later than the midpoint of the period). However, we continue to believe
that we have the discretion under the statute to promulgate regulations
that permit an institution that is not required to take attendance to
document a date other than the specified withdrawal dates if that date
more accurately reflects the point when the student ceased academic
attendance.
We note that the use of a last date of attendance at an
academically-related activity has been a part of the guidance for the
definition of a student's Title IV, HEA program withdrawal date for
over eight years. We believe that this qualifies as longstanding Title
IV, HEA program policy. Just as there is a wide variety in the types of
educational programs offered by institutions, there appears to be a lot
of variation in ways that institutions have been able to identify a
last date of attendance at an academically-related activity. We believe
that the guidance provided in the preamble to the NPRM is sufficient
for an institution to determine how the institution should properly
document a student's last date of attendance at an academically-related
activity without being overly prescriptive. This flexibility permits
institutions to control the process used to verify the student's
attendance in these activities. We will continue to provide guidance in
this area through Department publications to address specific concerns
that are not addressed by this guidance.
Changes: None.
Acceptable Documentation
Comments: One commenter supported the position in the NPRM that
acceptable documentation for a student's withdrawal date should not be
specified in the regulations.
Discussion: None.
Changes: None.
Section 668.22(d) Approved Leaves of Absence
Comments: A few commenters supported the position in the NPRM that
an institution would be allowed to grant more than one leave of absence
to a student. In response to the Secretary's specific request for
comment, commenters suggested the following additional categories of
unforeseen circumstances that the commenters believe warrant the
granting of more than one approved leave of absence: jury duty;
incarceration; unexpected loss of child care; the need to care for
children during the children's school breaks; changes in work schedules
(for example, a part-time employee is required to work full-time for a
few weeks); protection in cases of domestic abuse where a student has
been forced to go into hiding; dependent care outside the parameters of
the Family and Medical Leave Act of 1993 (FMLA) (no specifics
provided); financial reasons; death or illness of a family member;
student suffers injury or major illness; snow days; travel.
A few commenters believed that a list of circumstances could not
address every unforeseen circumstance that should warrant an approved
leave of absence. A couple of these commenters believed that
institutions should have the discretion to grant an approved leave of
absence, as long as the institution maintained the appropriate
documentation. One commenter suggested limiting the number of leaves of
absence to two, rather than defining all unforeseen circumstances. One
commenter thought that unforeseen circumstances should be defined, but
only two leaves of no more than 60 days each should be permitted for
these reasons. One commenter felt that one leave of absence in a 12-
month period is sufficient.
Discussion: We continue to believe that more than one leave of
absence should only be granted for limited, well-documented
circumstances due to unforeseen circumstances. As stated in the NPRM,
we believe this interpretation is supported by the language of the
statute, which refers to a student who takes ``a'' leave of absence
from an institution. This interpretation also recognizes the fact
[[Page 59027]]
that it is often not in the best interest of a student to have multiple
interruptions in their education.
We believe that jury duty, like military duty, is a circumstance
that would warrant multiple leaves of absence. We believe that some of
the circumstances suggested by the commenters, such as illness of a
family member or an injury or major illness of the student, are
adequately covered by the FMLA. We do not believe that the additional
circumstances suggested by the commenters would warrant multiple leaves
of absence, either because they are not unforeseen, are difficult to
document, or are likely to be adequately addressed by one leave of
absence. However, we recognize that some of these circumstances, as
well as other circumstances that have not been identified by either the
Department or the commenters, may force a student who would otherwise
continue their education to withdraw. We believe that the institution
is in the best position to determine if one additional leave of absence
is necessary for unforeseen circumstances that are not specifically
mentioned in the regulations. However, in keeping with our intention to
limit interruptions to a student's education, we believe that this
leave of absence should be limited to 30 days and can only be granted
if a student has already been granted an approved leave of absence at
the institution's discretion. Therefore, consistent with the NPRM, the
regulations would not specify the circumstances that would warrant one
leave of absence; rather, the institution would determine if the
student's reason for requesting a single leave of absence is
appropriate. An institution may grant subsequent leaves of absence if:
* The student's circumstances meet one of the following
conditions for multiple leaves of absence: military reasons,
circumstances covered by the FMLA, or jury duty, or
* For one additional leave of absence not to exceed 30 days,
the institution determines that the additional leave of absence is
necessary. This type of leave of absence would have to be subsequent to
the granting of the single leave of absence that is granted at the
institution's discretion.
In accordance with the statute, the total number of days of all leaves
of absence cannot exceed 180 days in any 12-month period.
Changes: Section 668.22(d)(2) is amended to provide that for one
additional leave of absence not to exceed 30 days, the institution may
determine that the additional leave of absence is necessary due to
unforeseen circumstances. This type of leave of absence would have to
be subsequent to the granting of the single leave of absence. Section
668.22(d)(2) is amended to provide that jury duty is another
circumstance, in addition to military reasons or circumstances covered
by the FMLA, for which an institution may grant a student subsequent
leaves of absence.
Comments: One commenter asked if leaves of absence granted for
``military reasons'' includes the National Guard.
Discussion: We believe that leaves of absence that are granted for
military reasons include training and service requirements of the
National Guard.
Changes: None.
Comments: One commenter noted that some of the circumstances
covered by the Family and Medical Leave Act of 1993 (FMLA) are covered
for a 12-month period. The commenter asked us to clarify the interplay
of the 12-month period for FMLA with the 180 days restriction of leaves
of absence.
Discussion: Two of the circumstances that are covered under the
FMLA, birth and care of a child, and adoption or foster care placement,
are covered for up to 12 months for purposes of the FMLA. For purposes
of the Title IV, HEA programs, this means that a student may be granted
an approved leave of absence for these circumstances, as long as (1)
the entire leave of absence will occur sometime during this 12 month
period of time, and (2) the total number of days of all leaves of
absence for the student does not exceed 180 days in the 12-month period
that began on the first day of the student's first leave of absence.
For example, a student has a child who is born on February 1, 2000. The
student has never taken an approved leave of absence before. The
student may be granted an approved leave of absence for the birth of
and/or care of the child for up to 180 days during the period of
February 1, 2000 through February 1, 2001, 12 months from the birth of
the child. If the student requests a subsequent leave of absence to
care for the child that would begin on January 1, 2001, the leave of
absence could be no longer than 31 days, because the circumstance that
triggered the leave of absence would no longer be covered under the
FMLA after February 1, 2001.
Changes: None.
Comments: One commenter believed that it was unreasonable to
require that a student be permitted to complete the coursework begun
before the leave of absence. Since a leave of absence can be up to 180
days, the commenter noted that this period of time exceeded the limits
most institutions permit before having a grade of ``incomplete'' turn
into a failing grade. The commenter suggested that it would be more
consistent with existing academic requirements for the term
`coursework' to be changed to `course of study or major'. One commenter
suggested that the requirement to exclude periods of excused absences
from the calendar days used in the return calculation does not work
because any leave of absence that extended beyond the end of the
payment period or period of enrollment would automatically qualify the
student to earn 100 percent of the Title IV, HEA program funds.
Discussion: Approved leaves of absence are viewed as interruptions
in a student's academic attendance. Therefore, when a student returns
from a leave of absence, the student should be continuing the academic
program where it left off. Approved leaves of absence must conform to
the institution's policy, and institutions are expected to play an
active role in evaluating whether a requested leave of absence should
be granted and how it can be structured to permit a student to complete
the payment period or period of enrollment. Although a leave of absence
may extend for up to 180 days, we anticipate that most requests will be
for shorter periods that will conform to an institution's requirements
for completing courses within specified time limits. Furthermore, the
scenario provided by the commenter is one where a student has not
ceased to perform academically if the student is completing the course
work through independent study rather than by taking classes at the
institution. Therefore, this would not be considered a leave of absence
for Title IV, HEA program purposes. When a student returns from an
approved leave of absence the payment period or period of enrollment
used for a return calculation would be adjusted to reflect the new
ending date. In order to prevent a situation where a student is able to
earn funds simply by taking a leave of absence, those days must be
excluded from the return calculation.
Changes: None.
Comments: One commenter believed that retroactive requests for
leaves of absence should be permitted because students often do not
know that they will need a leave of absence until they have been absent
from the institution for a few days.
Discussion: We continue to believe that it is reasonable to expect
an institution to collect a written request for an approved leave of
absence from the student prior to the leave of absence, unless the
student is unable to provide the written request prior to the leave of
[[Page 59028]]
absence due to unforeseen circumstances. In such cases, the institution
must document the reason for its decision to grant the leave of absence
prior to receiving a written request and collect the written request
from the student at a later date.
Changes: None.
In-School Status for Title IV Loans
Comments: Several commenters believed that a student should be
considered to have in-school status for Title IV, HEA loan purposes
during an approved leave of absence. The commenters argued that
considering a student to have in-school status for Title IV, HEA loan
purposes is consistent with the assertion that a student on an approved
leave of absence is still considered to be enrolled at the institution.
The commenters contended that the inconsistency of placing a student in
an out-of-school status for loan purposes, while the student is still
considered enrolled in the institution, would be too confusing and
burdensome to students and their families, institutions, lenders, and
guaranty agencies. Some commenters noted that leaves of absence are
granted to encourage a student to continue his or her education. The
commenters believed that guaranteeing that a student will not exhaust
any or all of their grace period will be an added incentive to return
and avoid immediate repayment. One commenter noted that most loan
servicing systems generate letters to a borrower beginning in the first
month of the borrower's grace period. The commenter contended that
these notices will confuse students who are considered to be in
enrollment for other Title IV, HEA purposes.
Discussion: We agree with the commenters' arguments that the
inconsistency of treating a student on an approved leave of absence as
a withdrawn student for purposes of terminating a student's in-school
status would not be in the best interest of the student and would
possibly create undue burden for institutions, lenders and guaranty
agencies. We agree that a student who is granted an approved leave of
absence should be considered to remain in an in-school status for Title
IV, HEA loan repayment purposes. However, as discussed previously, if a
student does not return from an approved leave of absence, the
student's withdrawal date, and the beginning of the student's grace
period, is the date that the student began the leave of absence (for a
student who withdraws from an institution that is not required to take
attendance) or the last date of academic attendance as determined by
the institution from its attendance records (for a student who
withdraws from an institution that is required to take attendance).
Therefore, an institution must report to the loan holder the student's
change in enrollment status as of the withdrawal date.
Changes: Section 668.22(d)(1) has been changed to reflect that if a
Title IV, HEA program loan borrower has been granted an approved leave
of absence, the borrower is considered to be enrolled in the
institution for purposes of reporting the student's in-school status
for Title IV, HEA program loans.
Scheduled Breaks
Comments: A few commenters supported the position that a student
would not have to be granted an approved leave of absence for periods
of nonattendance for a scheduled break. The commenters assumed that
this position would apply to summer sessions when the student is not
scheduled to be in attendance.
Discussion: The commenters are correct that an approved leave of
absence would not be necessary for a summer session for which the
student was not scheduled to be in attendance. However, if a scheduled
break falls within a payment period or period of enrollment and the
student does not return at the end of the scheduled break, the
withdrawal date would reflect that the scheduled break was a period of
non-attendance.
Changes: None.
Sec. 668.22(e) Calculation of the Amount of Title IV Assistance Earned
by the Student
Use of Payment Period or Period of Enrollment
Comments: A few commenters suggested that institutions that use
period of enrollment for the calculation should be allowed to use aid
awarded rather than the aid that was disbursed or could have been
disbursed as of the date of the student's withdrawal. The commenters
said that the use of aid awarded was provided for in the law, and that
the option of using period of enrollment is made void unless an
institution is allowed to use the aid awarded in the calculation. The
commenters explained that the proposed requirement to only use the
amount of aid disbursed or that could have been disbursed at the time
of the student's withdrawal is unfair because students who withdraw
during the first payment period will not have been enrolled long enough
for the institution to have disbursed all aid awarded for the period of
enrollment. The commenters believe that institutions will be acting
against the interests of their students by using the period of
enrollment in the calculation rather than the payment period because
less aid could be considered in the calculation.
Discussion: Although the commenters point out that the law refers
to aid awarded when describing the institution's option to use either
payment period or period of enrollment in the calculation, that
reference simply describes the relevant period to use in the
calculation. The law gives institutions the option to use either the
payment period or period of enrollment ``for which assistance was
awarded'' in the calculation, but specifies that the percentage of
assistance earned is applied to the assistance that ``was disbursed
(and that could have been disbursed). . . as of the day the student
withdrew''.
Changes: None.
Comments: A small number of commenters pointed out that the
requirement for an institution to consistently use either the payment
period or period of enrollment measure poses a problem in some
circumstances, particularly for students that are transferring to the
institution or are re-entering to complete their program. Some of those
commenters said that they read the law to allow institutions to choose
on a student-by-student basis to address differences in student
circumstances. The commenters noted that many institutions would decide
to use the payment period as a basis for doing most return
calculations, because that calculation would be better for most
students. The commenters said that the choice in the law to use payment
period or period of enrollment was supposed to give them flexibility to
use a calculation that matched the way they charged for their programs.
Discussion: Institutions must choose between using payment period
or period of enrollment on a program by program basis. This requirement
promotes consistency in administration of the programs and makes it
simpler for schools to explain the return of funds provision to
students. Students enrolling in a program at an institution will also
be subject to the same period of measure for return of unearned aid
calculations throughout their attendance. We therefore reject the
suggestion that institutions should be able to choose the appropriate
period for this calculation on a student by student basis for the
students that regularly enroll in their programs. Some different
treatment is being permitted for
[[Page 59029]]
students that transfer into an institution or re-enter, and this is
discussed below.
Changes: None.
Comments: A few commenters said that the proposed regulation is
confusing because it does not distinguish between financial aid awarded
(which is subject to the student meeting certain criteria to receive
any amount awarded) and financial aid that the student was eligible to
receive. The commenters illustrated this by explaining that a first
time borrower must attend 30 days before being awarded the financial
aid for the first loan disbursement. The student must then continue
attending into the second payment period in order to receive the second
disbursement of the loan proceeds. The commenters recommended revising
the regulation to provide that the amount to be returned may never
exceed the difference of the amount disbursed and the amount earned.
Discussion: The calculation in the NPRM determines whether more aid
was actually disbursed than the student earned. If so, the unearned
portion must be returned. The proposed language has already been
written to clarify 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. We believe that the proposed language accurately
describes the steps needed to perform the calculation, and believe that
this language better describes the processes that institutions will use
when performing these calculations.
Changes: None.
Comments: A few commenters asked how to determine tuition and fee
costs to be paid in a payment period or period of enrollment when the
program is longer than those periods. These commenters pointed out that
some institutions charge for equipment and supplies up front, even
though that equipment may be used throughout a program that could last
for two years or perhaps longer. Other questions dealt with whether
such charges could be pro-rated, and asked how registration fees or
book charges would be handled in the calculation. The commenters
suggested that deference should be given to the recommendations made by
the schools and their students who are affected by this provision. Some
of these commenters said that the Department has a longstanding policy
to include up-front charges in the first period of enrollment so that
there would be no tuition and fee costs for subsequent periods.
Discussion: An institution would be permitted to pro-rate the total
program charges for the program to correspond to the payment period if
the institution has elected to use payment period rather than period of
enrollment for the return calculations. If the institution retained a
higher amount of charges to the student for the payment period for any
reason, including allocating costs for equipment and supplies to the
front of the program, the funds retained by the institution are
attributed to that payment period because they are a better measure of
the institutional charges paid by the student for that period.
Changes: None.
Comments: A few commenters raised concerns about the statutory
requirements of the return calculation. For example, one commenter
argued that forcing institutions to return unearned Title IV, HEA
program funds through 60 percent of the period could cause the
institutions to delay disbursing funds to their students until after
this point. Those schools pointed out that students that withdraw after
the beginning of a payment period cannot be replaced, and the cost to
the institution of providing that program does not decrease. Another
commenter pointed out that his state required a shorter refund policy
that the commenter believed was fairer than the return calculation.
Other commenters complained about the additional costs institutions
would face from adding additional staff and returning larger amounts of
unearned funds. Other commenters objected to having students earn funds
on a pro-rata basis because it does not correspond to the costs
incurred by the student for attending the institution, and complained
that the statutory formula does not round the percentages earned in 10
percent portions like the prior version of the law did.
Discussion: The commenters address components of the return
calculation that are statutory and cannot be changed by regulation.
Changes: None.
Re-Entry and Transfer Students
Comments: Some institutions pointed out that it was impossible for
an institution to use a consistent number of hours in a payment period
for students that transferred into the institution or re-entered it,
because the first payment period for those students will be whatever
portion of a payment period remains to be completed before the student
can begin a subsequent full payment period. A few commenters pointed
out that the Title IV, HEA program funds at issue during this partial
payment period are, in effect, discounted twice, once at entry, due to
the Federal Pell Grant proration requirements, and once at the time of
withdrawal for the return calculation. Other schools also complained
that this problem was further complicated because institutions are not
allowed to use aid awarded in the calculation. Another commenter noted
that the benefit of using payment periods for the regularly enrolled
students would be negated if the institution used payment periods for
the transfer and re-entry students as well. The commenter believed that
it may be fairer for those students to have their period of enrollment
used in a return calculation.
Discussion: We acknowledge that students transferring to an
institution or re-entering a nonstandard term or non-term based program
are more likely to have a short, non-standard payment period that would
have to be completed before their schedules could fit into the standard
payment periods at the institution. Both these groups of students are
distinct from students who have attended a program from the beginning
of the payment period or period of enrollment, and it may be
appropriate for an institution to choose to use either a payment period
or period of enrollment basis for a return calculation for one of these
groups of students, even if a different period is used for the students
who have been in attendance from the beginning of the payment period or
period of enrollment in that program.
Changes: Section 668.22(e)(5)(ii) has been modified to permit an
institution to make a separate selection of payment period or period of
enrollment for return of unearned aid calculations for students that
transfer to the institution and for those who reenter the institution
for students who attend a nonterm-based or a nonstandard term-based
educational program.
Comments: A small number of commenters pointed out that the return
calculation does not provide for treatment of aid that was awarded but
not disbursed, including situations where the institution elects to do
multiple disbursements. The commenters suggested that the multiple
disbursements should not be treated as funds that would be applied to
institutional charges, but that institutional charges should be applied
against the amount the student and the institution must repay. Another
commenter said that the return calculation does not adequately address
how undisbursed funds should be treated because of the many different
scenarios that can occur at a college where a student withdraws before
[[Page 59030]]
receiving all funds that have been disbursed to him.
Discussion: As discussed above, the law determines the amount of
funds earned by the student in the return calculation by applying the
percentage the student completed of the payment period or period of
enrollment to the funds that were disbursed, or could have been
disbursed, as of the day the student withdrew. Students that have not
received aid that could have been disbursed to them at the time they
withdrew are entitled to receive any additional sum earned that is
greater than the amount already disbursed to them. This snapshot
approach to considering whether additional aid may be awarded will
provide a consistent set of procedures that will prevent post-
withdrawal disbursements of unearned aid. Even though multiple
disbursements may have been scheduled for a student at the time he or
she withdrew, the return calculation will limit those disbursements to
actual amounts earned. A student receiving a post-withdrawal
disbursement will have earned all aid that had been disbursed, and the
subsequent disbursement will only be for the additional amount earned.
A student receiving a post-withdrawal disbursement will therefore never
have any unearned funds that would be the responsibility of the student
in the return calculation, as might be the case if all of the student's
disbursements were made at the beginning of the period. This rule will
prevent institutions from making post-withdrawal disbursements of aid
that could be manipulated to alter the grant/loan mix of funds used in
the return calculation. We believe it is consistent with the law to
base the return calculation on the actual aid that had been disbursed
at the time the student withdrew.
Changes: None.
Sec. 668.22(f) Percentage of Payment Period or Period of Enrollment
Completed
Credit Hour Programs
Comments: Several commenters questioned how holidays and weekends
should be treated in the calculation of days completed, particularly
when combined with a short break. One commenter suggested that the
calendar days used in the calculation should be defined as school days,
and exclude weekends and holidays from the calculation. The commenter
argued that this treatment would provide consistency among terms and
would comport with the current method of determining repayments. Other
commenters agreed that including weekends and short breaks complicates
the calculation and does not accurately reflect the actual course
completion. Conversely, other commenters pointed out that students are
often studying during weekends and during short breaks, and they argued
that all calendar days should count in the return calculation. Another
commenter preferred basing the calculation on weeks completed, and
suggested that some rounding of calendar days completed be permitted in
order to simplify the calculation.
A few commenters argued that the proposed exclusion of 5 day breaks
was too short if the weekend days would be considered a part of that
period. The commenter noted that every break of 3 days or more
occurring prior to or after a weekend would create a period that would
be excluded from the return calculation, and recommended that the
number of days of closure be increased to more accurately reflect the
expenses incurred by the institution during short-term closure. One
commenter pointed out that most colleges have a one week Spring break
in the Spring term, but only one-day or two-day holidays in the Fall
even though the number of teaching days are the same. The commenter
believed that this disparity in breaks would require students
withdrawing in the Spring to have to return more funds than students
that withdraw at a comparable point in the Fall payment period.
Discussion: The law generally requires the use of calendar days in
the return calculation. The proposed rule would exclude breaks of five
or more consecutive days in order to provide for more equitable
treatment to students that withdraw near each end of a scheduled break.
In those instances, the student that withdrew after the break would not
be given credit for earning an additional week of funds during the
scheduled break, but would instead earn only an additional day or two
more funds than a student that withdrew right before the start of the
break. We intend for institutions to exclude all days between the last
scheduled day of classes before a scheduled break and the first day
that classes resume. For example, where classes end on a Friday and do
not resume until Monday following a one-week break, both weekends would
be excluded from the return calculation. If classes were taught on
either weekend for the programs that were subject to the scheduled
break, those days would be counted.
Changes: None. Comments: One commenter pointed out that the
proposed regulation does not fully address non-term credit hour
programs and nontraditional program formats, especially those non-term
credit hour programs that consist of consecutive courses where students
may be scheduled to attend one or two days a week or every other
weekend. In those instances, five or more days would routinely occur
between class meetings, and the commenter asked if those days would be
treated as scheduled breaks. Another comment suggested that we should
continue to work with the financial aid community to identify the best
way to measure the period used in the return calculation for these non-
traditional programs.
Discussion: We note that the proposed rule excludes scheduled
breaks of at least five consecutive days. For a program that regularly
met each weekend for its entirety, the days between classes would not
be excluded because they were not part of any regularly scheduled
break. If classes were not held on at least one of the scheduled days
during a weekend, the period from the last scheduled day of class
before the scheduled break until the next scheduled day of class after
the break would be excluded from the return calculation. We believe
that this result is consistent with the application of this rule to
traditional institutions, since a program that usually offered classes
on Saturday and Sunday would be taking a break from half of a week's
classes if it did not meet on one of those days.
Changes: None.
Clock Hour Programs
Comments: One commenter said that the proposed regulations for
clock hour institutions were too complex. A few commenters argued that
the return calculations for clock hour institutions should use
scheduled clock hours to determine the amount of aid earned rather than
considering the actual clock hours completed in the program, because
this is more consistent with the requirement to use calendar days as
the measure of aid earned at credit hour institutions. Other commenters
argued that the law was intended to create similarity between rules for
credit hour and clock hour institutions by permitting the use of
scheduled hours. These commenters pointed out that credit hour students
can attend the first day of classes and not again until the 30th day
and receive aid for that 30-day enrollment if they withdraw.
Furthermore, if the student unofficially withdrew, he would receive aid
through the midpoint of the payment period.
A small number of commenters also argued that the proposed
regulations did
[[Page 59031]]
not correctly interpret the law concerning when scheduled clock hours
are used instead of completed clock hours. These commenters believe the
law permits the Secretary to establish a threshold of minimum hours
such as 10 percent of the payment period that, when completed, would
entitle a student to be paid for scheduled hours from that point on
whenever he or she withdraws.
Other commenters recommended a number lower than 70 be used for the
percentage of completed hours that would allow a student to be paid for
scheduled hours, or argued that it was punitive to limit some students
to being paid for completed hours if they only completed 69 percent of
the hours they were scheduled to take when a student completing 70
percent would get the bonus of being paid for all scheduled hours. A
few commenters also suggested that the 70 percent number be changed to
66 percent in order to correspond with our satisfactory academic
progress measures that require a student to complete a program in no
more than 150 percent of the scheduled time, so that a student could be
paid for up to 150 percent of the actual hours completed at the time of
withdrawal.
Discussion: The law provides clear authority for the Secretary to
establish the percentage of attendance a student must achieve in order
to be paid for scheduled hours rather than completed hours. Under the
new regulation, that measure will be based upon the student's success
at completing at least 70 percent of the hours scheduled to be
completed at the time he or she withdrew. The 70 percent requirement is
a bright line, and students that meet the attendance threshold will be
paid for scheduled hours, while students with lower attendance rates
will not. The 70 percent attendance requirement was reached after
numerous meetings with a work group that were held during the
negotiated rulemaking process. We reject the suggestion that the number
be lowered in order to mirror our satisfactory academic progress
provisions, which serve the very different purpose of providing
students that remain enrolled beyond the scheduled length of their
program with additional time to complete their studies.
Changes: None.
Comments: A few commenters objected to the proposed requirement
that a student in a clock hour program actually complete 60 percent of
the program before earning 100 percent of the funds. The commenters
argued that the 60 percent measure identified in the law should be
based on the student's scheduled hours if the student were entitled to
be paid for scheduled hours, as discussed above. The commenters said
that there is no specific statutory basis for imposing this
restriction, and they asserted that it discriminates against clock hour
students because no comparable restrictions are imposed on students
enrolled in credit hour programs. One commenter pointed out that some
states approve clock hour programs that permit students to attend with
accelerated schedules, so that a student would withdraw with more
completed hours than scheduled. The commenter sought either
clarification or a change in language to provide that a student could
be paid for completed hours if they exceeded the amount of scheduled
hours.
Discussion: The law permits a student to earn 100 percent of the
funds when completing 60 percent of a program, and we view the actual
completion of that amount of the program as a substantive requirement.
We refuse to dilute this measure by treating a student that completes
42 percent (70 percent of 60 percent) of a program as having earned 100
percent of his or her Title IV, HEA program aid. We note that the
student completing 42 percent of the program in this example will still
get the substantial benefit of having earned aid for 60 percent of the
scheduled hours because the student met the 70 percent attendance
requirement when he withdrew. We note that the language in the
regulation permits the institution to use either the hours completed or
the scheduled hours (subject to the 70 percent attendance requirement)
in the calculation, so that a student completing more hours than were
scheduled to be completed at the time he or she withdrew could be paid
for the completed hours.
Changes: None.
Excused Absences
Comments: Many commenters suggested that excused absences should be
treated as completed hours, because we currently permit clock hour
institutions to count up to 10 percent of the missed hours in the
program as completed hours. The commenters noted that this was also
consistent with higher education community practice.
A few commenters further suggested that the 10 percent limit on
excused absences should be raised to 15 percent or whatever standard
was permitted in state regulations. Some commenters also suggested that
excused absences should include jury duty, military service, court
appearances, sickness, medical reasons and family emergencies since
these are all circumstances beyond the student's control.
One commenter claimed that not counting excused absences as
completed hours would create potential problems for transfer students
and re-entry students because the state would recognize hours for
excused absences as completed even though the Department would not.
Other commenters said it was not fair to exclude excused absences from
being treated as completed hours because credit hour institutions are
allowed to count weekends and holidays in the return calculation.
One commenter supported the proposed regulation because the 70
percent completion measure used to permit students to be paid for
scheduled hours rather than completed hours would already include these
absences.
Discussion: Excused absences will not count as completed hours in
the return calculation. For students that withdraw from their programs,
the absences will be classified as scheduled hours that were not
completed. In order to be paid for those hours, the student must
satisfy the 70 percent attendance measure. We believe that the
allowance of up to 30 percent of the scheduled hours to be missed is
sufficient to cover most of the situations for unexpected absences that
were posed by the commenters. We also note that some of the suggestions
for reasons to recognize excused absences would appear to come within
the criteria an institution could use to give a student a leave of
absence. For students that do not withdraw from their programs, the
existing policy in the cash management regulations, Sec. 668.164(b)(3),
of not requiring clock hours to be completed for excused absences of up
to 10 percent of the program will be retained.
Changes: None.
Rounding
Comments: Some commenters pointed out that there was no mention of
rounding the numbers used in the return calculation, and they requested
guidance.
Discussion: The return calculation should use the following
rounding procedures. Use three decimal places for most steps in the
calculation, rounding the third decimal place up one if the fourth
decimal place is 5 or above. For example, .4486 would be rounded to
.449, or 44.9 percent. There is one exception to this general rule.
Monetary amounts may be reported in dollars and cents using normal
rounding rules to round to the nearest penny. Final repayment amounts
that the institution and student are each responsible to
[[Page 59032]]
return may be rounded to the nearest dollar.
Changes: None.
Section 668.22(g) Return of Unearned Aid, Responsibility of the
Institution
Comments: A few commenters believed that it was unduly financially
burdensome to hold an institution responsible for repaying Title IV,
HEA program funds that were disbursed directly to the student. The
commenters contended that the assumption of the proposed rules that an
institution has retained Title IV, HEA program funds to cover
institutional charges before disbursing any Title IV, HEA program funds
to the student is incorrect.
A few commenters argued that it would be unfair to include
institutional charges that are paid by other sources of aid that are
restricted to institutional charges--such as State funding programs,
State grant programs or veteran's grants--in the amount of
institutional charges that is used for purposes of determining the
portion of unearned Title IV, HEA program funds that the institution
must return. One commenter noted that in the case of restricted
funding, when a student withdraws, the institution will have to refund
a portion of the aid to the other source. The commenter believed that
it would be financially burdensome for the institution to have to also
return funds for the same institutional charges to the Title IV, HEA
programs. A few of the commenters contended that if the amount of
restricted aid was removed from the amount of institutional charges,
the student would be able to repay the same amount under the more
beneficial repayment terms of a Title IV, HEA program loan.
A few commenters contended that an institution would have to take
undesirable actions to mitigate their financial loss. A few of these
commenters maintained that an institution will have to pass on the bill
to the student for the amount of Title IV, HEA program funds that the
institution had to return in excess of the Title IV, HEA program funds
that were actually received by the institution. A few commenters
maintained that an institution will have to change its refund policy so
that the institution will earn more institutional charges when a
student withdraws. A few commenters asserted that institutions will
have to delay some loan disbursements to avoid having to repay Title
IV, HEA program funds they never received. One commenter, a state
community college trustees association, believed that requiring
institutions to return Title IV, HEA program funds that were given to
the student will force the community colleges in the commenters State
to discourage thousands of students from enrolling if they believe that
the student may not complete the term. The commenter believed that
state community college enrollment could be reduced by more than 10
percent.
A few commenters contended that institutions with low or no
institutional charges, such as many community colleges, should be
exempt from the requirement that the institution return Title IV, HEA
program funds that it has not received because of the enormous negative
effects that this provision would have on these institutions and their
students.
A couple of the commenters believed that there should be an
exemption for institutions like those in the California community
college system, when institutional charges are paid or waived by a
State program. The commenters asserted that because Title IV, HEA
program funds are never used to pay the fees for these students, it
would be unfair to require the institution to return Title IV, HEA
program funds that were never received by the institution to cover
these fees. The commenter noted that any funds returned by the
institution will come at the expense of other programs or services to
students.
A few of the commenters maintained that students at low- or no-cost
institutions will be the hardest hit by this provision. The commenters
noted that the students who enroll at these institutions have the
greatest chance of owing a large overpayment because the amount of
Title IV, HEA program funds that the institution will be responsible
for returning--which is capped at the lesser of the total unearned
amount of aid or the student's institutional charges multiplied by the
percentage of unearned Title IV, HEA program assistance--will be quite
small.
Discussion: We do not agree with the suggestion that these
regulations should take into consideration whether other sources of aid
were actually used to pay a student's institutional charges when
allocating repayment responsibilities between the institution and the
student. The proposed regulation implements the statutory framework
that divides responsibility for repaying unearned Title IV, HEA program
funds between the institution and the student under a new system that
no longer controls the actual charges assessed by the institution. In
the statute, the allocation of repayment responsibilities looks first
to the institution to repay unearned Title IV, HEA program funds
because the Title IV, HEA program funds are provided under the
presumption embodied in the current regulations that they are used to
pay institutional charges ahead of all other sources of aid. The
regulations do not provide for institutions to adjust this allocation
by taking into consideration other sources of aid that might be used to
pay institutional charges for a student. We believe that it would be
administratively burdensome to try and take into consideration when
other sources of aid would be deemed to have paid some portion of
institutional costs for a student, particularly given the variations in
timing and conditions that may be associated with those sources of aid.
The commenters noted that institutions will have to change their
institutional refund policies to adjust to the new provisions. The new
provisions of section 484B of the HEA for the return of unearned Title
IV, HEA program funds have freed institutions to make such changes. The
law requires institutions to disclose and explain their refund policies
to students, and this should include some discussion of how the
institution might adjust a student's charges to take into account
repayments that the institution was required to make under these
provisions. As noted by some commenters, institutions may also consider
changing the disbursement schedules for students in order to have the
disbursements better match the rate at which the student is earning the
funds.
In response to the predictions by some commenters that some
community colleges may discourage enrollments by students that are less
likely to complete the term, we note that many options are available to
institutions to screen their applicants and actively work with them to
keep them enrolled. An institution should only admit students who have
an intention of completing the program in which they enroll.
Institutions should inform students of their responsibilities under
these rules to repay unearned funds if they withdraw.
The law does not permit exemptions of any institutions that are
participating in the Title IV, HEA grant or loan programs from the
requirements of section 484B, as implemented by these final
regulations. We note that institutions may instead waive the
institutional charges for their students rather than paying them state
scholarships, provided that the waiver of those fees is taken into
consideration when calculating the student's cost of attendance. This
would result in no institutional responsibility for repayment of
unearned Title IV, HEA program funds because there would be no
institutional charges. As pointed out
[[Page 59033]]
by the commenters, the students receiving the largest grant payments
for living expenses are the students most likely to have a large grant
overpayment if they withdraw from the program. These students are also,
therefore, the ones that will derive the largest benefit from having 50
percent of their grant overpayment eliminated under the return
calculation. In addition, we have developed repayment terms for
overpayments of Title IV, HEA grants that we believe will mitigate some
of the possible negative effects of these requirements on students.
Institutions that are particularly concerned about the impact of these
provisions on their students may wish to consider alternative
disbursement schedules or at least making additional disclosures to
students at the time the grant funds are disbursed to them.
Changes: None.
Comments: Commenters asked for clarification of, and suggested a
few changes to, the guidance in effect on the definition of
institutional charges. One commenter encouraged us to continue to
include the financial aid community in any revision efforts. One
commenter suggested that institutions be permitted to define
institutional charges based on the regulatory language proposed in the
NPRM.
Discussion: As stated in the preamble to the NPRM, we will revisit
the current guidance of the January 7, 1999 policy bulletin on the
definition of institutional charges to determine if revisions would be
appropriate given the changes to section 484B of the HEA. We will take
into account the comments received in response to the NPRM as part of a
larger effort to include the financial aid community in the evaluation
of the current guidance. Until further guidance is issued, the guidance
of the January 7, 1999 policy bulletin remains in effect.
Changes: None.
Comments: A few commenters believed that ``institutional charges
incurred by the student'' should be the institutional charges for which
the studen