Special Education -- Personnel Preparation to Improve Services and Results for Children with Disabilities (SC)

[Federal Register: December 9, 1999 (Volume 64, Number 236)]
[Rules and Regulations]
[Page 69137-69147]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09de99-13]

[[Page 69137]]

_______________________________________________________________________

Part III

Department of Education

_______________________________________________________________________

34 CFR Part 304

Special Education; Personnel Preparation To Improve Services and
Results for Children With Disabilities; Final Rule

[[Page 69138]]

DEPARTMENT OF EDUCATION

34 CFR Part 304

RIN 1820-AB46

Special Education--Personnel Preparation to Improve Services and
Results for Children with Disabilities

AGENCY: Office of Special Education and Rehabilitative Services of
Special Education Services, Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary establishes regulations governing specific
provisions of the Personnel Preparation Program to Improve Services and
Results for Children with Disabilities. The regulations are needed to
implement changes to the Individuals with Disabilities Education Act
(IDEA or the Act) that were adopted as part of the IDEA Amendments of
1997. Specifically, the regulations establish procedures to implement
section 673(h) of IDEA which requires that individuals who receive a
scholarship through personnel preparation projects funded under the Act
must subsequently provide special education and related services to
children with disabilities (or, for leadership personnel, work in areas
related to their preparation) for a period of two years for every year
for which assistance was received. Scholarship recipients who do not
satisfy their service obligation must repay all or part of the cost of
their assistance in accordance with the regulations. The regulations
implement requirements governing, among other things, the service
obligation for scholars, oversight by grantees, repayment of
scholarship, and procedures for obtaining deferrals or exemptions from
service or repayment obligations.

DATES: These regulations are effective January 10, 2000.

FOR FURTHER INFORMATION CONTACT: Renee Bradley, U.S. Department of
Education, 600 Independence Avenue, Washington, DC 20202-2641.
Telephone: (202) 358-2849. If you use a telecommunications device for
the deaf (TDD), you may call at (202) 205-9374.
Individuals with disabilities may obtain this document in an
alternative format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed in the preceding
paragraph.

SUPPLEMENTARY INFORMATION: On July 10, 1998 we published a notice of
proposed rulemaking (NPRM) for this program in the Federal Register (63
FR 37466). In the preamble to the NPRM, we discussed on pages 37466
through 37469 the major provisions proposed to implement the service
obligation requirements. These are summarized below. In several
instances the final regulations contain changes from the NPRM. These
changes are noted below, and are fully explained in the Analysis of
Comments and Changes section of this preamble.
These regulations restate the statutory requirement for the service
obligation under this program, stipulate that the service requirement
applies to individuals who receive scholarship assistance from a funded
project, and clarify that scholarships may be awarded only to
individuals pursuing degrees, licenses, certifications, or endorsements
related to special education, related services, or early intervention
services.

Subpart A--General

Section 304.3 defines key terms used in this part of the
regulations, including related services, special education, academic
year, full-time work, and scholarship.

Subpart B--What Conditions Must Be Met By the Grantee?

Section 304.20 reflects our intention to announce for each
personnel training grant competition a specific percentage, up to 75
percent, of a grantee's total award that must be used to support
scholarships. The provision would allow us to award grants that use
less than the published percentage to pay for scholarships in light of
the unique nature of a particular project. However, because financial
support for graduate assistants is not considered scholarship
assistance, such costs may not be paid from the minimum percentage of
grant funds that must be used to support scholarships.
Section 304.21 stipulates the types of costs that would be
allowable under program grants.
Section 304.22 identifies requirements that grantees must meet in
disbursing scholarships. Paragraph (a) relates to citizenship or
residency requirements. Paragraph (b) requires grantees to limit a
scholarship to the amount by which the cost of attendance at the
institution exceeds the amount of any grant assistance the individual
receives under Title IV of the Higher Education Act. The final
regulation deletes paragraph (c) of the NPRM that specified that
scholarship assistance would be limited to an individual's cost of
attendance for no more than four academic years total, with certain
exceptions (see the discussion in the Analysis of Comments and Changes
section elsewhere in this preamble).
Section 304.23 lists the assurances that must be provided by a
grantee intending to provide scholarships. These include providing a
written agreement with each scholar who receives a scholarship that
specifies the terms and conditions applicable to the scholarship. The
most significant part of this agreement is the requirement that the
scholar provide special education and related services to children with
disabilities or early intervention services to infants and toddlers and
their families on a full-time basis; and for a period of at least two
years for every year for which assistance was received. Paragraph
(b)(2) requires scholars to fulfill their service obligation by working
in a position or positions in which a majority of the persons to whom
the individual provides services are receiving from the individual
special education and related services as defined in Part B of the Act
or early intervention as defined in Part C of the Act. Because scholars
who enter leadership positions related to special education do not
typically serve a classroom or caseload of students, paragraph (b)(3)
would apply a somewhat different standard to the service obligation for
those who receive scholarships from leadership training projects
(section 673(c) of the Act). Those scholars would be required to work
full-time, for a period of at least two years for each year of
assistance, in a position (or positions) in which a majority of the
scholar's time is expended on work related to his or her training
(i.e., special education, related service, or early intervention
leadership).
Section 304.23(b)(4) clarifies that the service obligation
requirements as applied to part-time scholars will be based on the
accumulated academic years of training for which the scholarship is
received.
Section 304.23(c) through (f) respectively identify grantee
assurances related to: scholarship repayment, the grantee's standards
for measuring a scholar's academic progress, the grantee's
responsibility for ensuring compliance with the service obligation
requirements, and the grantee's procedures for notifying scholars in
writing of their service obligation upon their exit from the training
project. A grantee would provide assurances to the Department that it
has established policies or procedures to address each of these
requirements and the remaining requirements in Sec. 304.23, prior to
receiving a training grant under IDEA. In the final regulations,
specific

[[Page 69139]]

reference to a tracking system in Sec. 304.23(e) has been eliminated.
Section 304.23(g) and (h) identifies the requirements governing
maintenance and submission of information related to each scholarship
recipient that enable grantees to monitor compliance of scholars with
the proposed regulations.
Section 304.23(i) requires grantees to notify the Department at the
time an individual has failed to fulfill or has chosen not to fulfill
the applicable service obligation within the appropriate time period.

Subpart C--What Conditions Must Be Met By the Scholar?

Section 304.30 specifies the requirements that a scholar must meet
in order to receive a scholarship under the program including (a) being
enrolled in a course of study leading to a degree, certificate,
endorsement, or license related to special education, related services,
or early intervention services; (b) entering into a written agreement
with the grantee establishing the service obligation requirements; (c)
receiving training at the institution or agency designated in the
scholarship; (d) not accepting educational allowances from any other
entity if that allowance conflicts with the individual's obligations
under the program; (e) maintaining satisfactory academic progress; and
(f) providing information to the grantee. In the final regulation,
Sec. 304.30(f) has been modified to eliminate a specific requirement
for a tracking system and, instead, to require that the scholar provide
information as requested by the grantee.
The final regulation also adds a new Sec. 304.23(g) that requires
the scholar to notify the grantee institution of changes in address,
employment setting, or employment status throughout the duration of the
service obligation.
Section 304.31 identifies circumstances under which a scholar may
receive a deferral or exemption to the repayment requirement.
Section 304.32 specifies the requirements governing the accrual of
interest and assessment of costs that would be included as part of the
individual's payback obligation.
Section 304.32(e) lists the various points at which a scholar
enters repayment status.
Section 304.32(f) authorizes the Department to establish a
repayment schedule that a scholar in repayment status must follow.

Analysis of Comments and Changes

In response to our invitation in the NPRM, thirty-nine parties
submitted comments on the proposed regulations. An analysis of the
comments and of the changes in the regulations since publication of the
NPRM follows.
We discuss other substantive issues under the sections of the
regulations to which they pertain. Generally, we not address technical
and other minor changes--and suggested changes the law does not
authorized the Secretary to make.

Section 304.3 What Definitions Apply to This Program?

Comments: Several commenters requested that we clarify the proposed
definition of ``academic year''. Specifically, these commenters noted
that the NPRM defines ``academic year'' in terms of a full-time course
of study and asked how to interpret the definition, and determine the
required service obligation, for scholars pursuing special education,
related service, or early intervention degrees or certificates on a
part-time basis. Other commenters proposed limiting the definition of
``scholarship'' in the NPRM to exclude disbursements for fees, student
stipends, books, travel, and other types of financial assistance. These
commenters stated that the service obligation provisions in the
proposed regulations should apply only to scholars receiving tuition
assistance since tuition scholarships are typically much higher than
those used to pay other costs.
Discussion: We agree that further clarification of the term
``academic year'', and of how it applies to part-time students, is
needed. Section 673(h) of the Act requires students receiving
scholarship assistance to fulfill a service obligation for a period of
2 years for each year of assistance. The proposed regulations reflected
our interpretation of the Act that the period of the scholar's service
obligation must be calculated based on the period for which the student
was enrolled in a full-time course of study (what constitutes a ``full-
time course of study'' is to be determined by the grantee institution).
Colleges and universities that award IDEA-funded scholarships to part-
time students must, therefore, add up the period for which a part-time
scholar receives a scholarship and calculate the length of the
individual's service obligation based on the number of accumulated
full-time academic years for which the student received financial
assistance. For example, a scholar who obtains a degree after attending
a university on a half-time basis for 4 academic years would accumulate
2 full-time academic years of assistance and have a 4-year service
obligation (2 years for each year of assistance) upon completion of the
program. Thus, the final regulations define ``academic year'' for part-
time students as the equivalent of a full-time academic year based on
the accumulation of part-time periods of study. Also, the work
requirements in Sec. 304.23 of the final regulations clarify that the
period of a scholar's service obligation is dependent on the number of
``academic years'' for which the individual receives scholarship
assistance.
We believe that the definition of ``scholarship'' in the proposed
regulations reflects congressional intent. The Act requires individuals
receiving a ``scholarship'' to fulfill an appropriate service
obligation for every year for which assistance was received. The Act
does not limit the service obligation to students receiving certain
types of assistance. Thus, we interpret ``scholarship'' to refer to all
types of financial assistance that a scholar might receive under an
IDEA-funded project, including assistance used to pay for student fees,
stipends, books, travel, as well as tuition. Moreover, the proposed
regulations followed the Act by basing the service requirements on the
period for which the scholar receives assistance, not on the amount of
assistance an individual receives.
Changes: The proposed definition of ``academic year'' has been
revised to mean a full-time course of study, or the equivalent of a
full-time course of study for a part-time student.

Section 304.20 What are the Requirements for Directing Grant Funds?

Comments: Several commenters expressed concern that requiring
grantees to expend at least 75% of their grant on scholarships would
impede the ability of projects to implement regional training or
distance education programs, or other unique (but costly) training
methods. Other commenters noted similar constraints on projects that
require extensive faculty supervision of scholars and questioned the
basis for the Secretary to impose a cap on a project's nonscholarship
costs. Some commenters also questioned the rationale for not
considering graduate assistantships to be scholarship assistance, as
was explained in the preamble to the NPRM. Finally, one commenter
stated that the minimum percentage of a grant that must be used for
scholarships should be established for each competition rather than on
a project-by-project basis.
Discussion: As the preamble to the NPRM indicates, setting a
minimum percentage of grant funds that must be used for scholarships is
one means of

[[Page 69140]]

addressing the significant shortage of qualified individuals available
to serve certain populations of children with disabilities (e.g.,
children with low-incidence disabilities) and is consistent with
Congress' expectation that personnel training monies be used to support
students pursuing training. We believe that establishing an appropriate
limit on nonscholarship costs offers the most effective option for
addressing well-established personnel shortages in the special
education, related services, and early intervention fields. Moreover,
we recognize the responsibility of States and institutions to provide
necessary training programs and, therefore, consider it appropriate to
focus Federal dollars on student support rather than university program
expenses.
We emphasize that the regulation authorizes the Secretary to
establish a minimum scholarship-directed percentage of up to 75% (i.e.,
the percentage will not exceed 75%). We consider 75% a reasonable level
at which to require scholarship support for some competitions based on
OSEP's extensive review of past budgets for a variety of OSEP training
grants. However, the actual published percentage will be determined on
a competition-by-competition basis depending on the type of projects to
be funded. The feasibility of, and need for, distance education
programs (used, for example, by projects preparing personnel to serve
those with low-incidence disabilities) and other costly features (e.g.,
extended supervision, regional training, etc.) will be taken into
account when the percentage for a grant competition is set. The final
regulations also clarify that the Secretary can allow an exception to
the published percentage for a particular project applicant only in
exceptional circumstances when the Secretary determines that an
exception is necessary to achieve the purposes of the program.
The explanation in the preamble as to how institutions of higher
education (IHEs) should classify costs for graduate assistantships was
intended to clarify the distinction between scholarships that pay for
student expenses and payments made to students in return for working as
graduate assistants. As we indicated in the NPRM, funding for graduate
assistants cannot be considered ``scholarship'' assistance and,
therefore, cannot be included as part of the minimum percentage of
grant funds that must be used to pay for scholarships, since
assistantships are conditioned on the individual working for the
institution. Scholarship assistance, on the other hand, supports the
cost of the student's attendance and is dependent, under section 673(h)
of the Act, on the individual fulfilling a service obligation in return
for that assistance. In order to fulfill Congress' mandate that
students receiving financial support under IDEA subsequently work in
the special education field, we again note that applicants proposing to
use IDEA funds to pay graduate assistants to assist in facilitating or
administering projects must classify those funds as personnel or other
nonscholarship costs and count those costs against the applicable
percentage limit for nonscholarship expenditures. If, as some
commenters indicated, an IHE considers the practical work experience
gained by its graduate assistants as an essential educational component
of the student's training, then we would urge the IHE to incorporate
that work into the student's course of study. In that way, an
individual's tuition-supported scholarship would cover the cost of such
training and students need not be compensated separately for their
work.
Changes: Section 304.20(b) has been amended to clarify that the
Secretary may award a grant that uses less than the published
percentage for scholarships in exceptional circumstances if the
Secretary determines that such an exception is necessary to achieve the
purposes of the program.

Section 304.22 What are the Requirements for Grantees in Disbursing
Scholarships?

Comments: Four commenters expressed concern about limiting scholars
to four years of financial assistance. These commenters suggested that
regulations authorize scholars to receive four years of assistance per
grant, thereby enabling individuals to receive additional assistance
under subsequent grants.
Discussion: We agree that the 4-year limit on assistance under
Sec. 304.22(c) of the proposed regulations should be amended. The
proposed limit was viewed as a reasonable period for individuals to
obtain their degree. It was not, however, intended to preclude scholars
from receiving assistance under subsequent grants when pursuing
additional degrees or training (e.g., doctoral training). We believe
that the best way to address the commenters' concerns is to eliminate
the provision in the proposed regulations that would have established
the limit. By not imposing a specific time limit on scholarship
assistance (and eliminating the need for the exceptions to the time
limit as set out in proposed paragraph (c)), scholars, in effect, will
be authorized to receive financial assistance for the same period as
that which applies to the grant. For example, an individual can receive
up to 5 years of assistance under a 5-year training grant provided the
remaining regulatory requirements are satisfied, including the
requirement in Sec. 304.22(b) that the level of assistance not exceed
the difference between the student's cost of attendance and the amount
of student financial aid the scholar receives. Scholars may also
receive assistance under subsequent grants in order to obtain
additional training (e.g., doctoral, postdoctoral training).
Changes: Paragraph (c), including the 4-year limit on financial
assistance, in this section of the proposed regulations has been
removed from the final regulations.

Section 304.23 What Assurances Must be Provided by a Grantee That
Intends to Provide Scholarships?

Comments: Several commenters requested that the length of a
scholar's service obligation be proportional to the amount of financial
assistance received. Other commenters requested that the regulations
not apply to post-doctoral students.
Most comments on this section questioned the service obligation
requirements in the proposed regulations, particularly the proposed
requirement in Sec. 304.23(b)(2) that the majority of the persons to
whom the scholar provides services be children receiving special
education, related, or early intervention services. Some of these
commenters stated that the service obligation provisions would serve to
limit the ability of scholars to work in regular education settings or
prevent special education teachers from being promoted out of the
classroom. Others indicated that the work requirements would negatively
impact teachers in early intervention settings who serve both infants
and toddlers with disabilities and those considered ``at risk of''
developmental delays.
A number of commenters on the service obligation requirements also
requested clarification in the regulations for determining whether an
individual working part-time has fulfilled the applicable service
obligation. Other commenters viewed the work requirements for
leadership personnel as unduly narrow. In addition, some commenters
asked whether individuals could begin fulfilling their service
obligation by working in the IDEA field during their training program.
Some commenters asked that Federal program officials determine the
appropriateness of the employment

[[Page 69141]]

settings in which each former scholar proposes to fulfill his or her
service obligation. Similarly, many commenters sought a much larger
Federal role--and a reduced grantee role--in tracking scholars
following completion of their training programs. Other commenters
recognized the need for grantees to track their former scholars and
sought additional Federal funding to carry out that function. Many were
concerned with the additional time and paperwork burden associated with
tracking that the proposed regulations placed on grantee institutions,
particularly large training universities. Others requested
clarification as to what happens if an institution is unable to locate
a former scholar. Lastly, a number of commenters requested
clarification on how the regulations applied to scholars who do not
complete their training.
Discussion: As explained in the preamble discussion to Sec. 304.3,
the Act bases a scholar's service obligation on the period for which
the individual received financial assistance rather than on the amount
of that assistance. Thus, regardless of the amount of financial
assistance offered to a scholar, the Act requires that the scholar
choose between fulfilling the two-year per year of assistance service
obligation, on the one hand, or paying back the scholarship on the
other. Both the proposed and final regulations reflect these options.
The statute also does not provide a basis for excepting certain
types of scholarships from the work or repay requirements. Thus, a
post-doctoral student, for example, receiving scholarship assistance
from a leadership preparation project funded under section 673(c) of
the Act is required to fulfill the service obligation requirements
specified in Sec. 304.23(b)(3) or repay the scholarship.
We have provided in the final regulations greater flexibility for
purposes of determining whether a scholar's job is sufficiently focused
on serving children with disabilities. Section 304.23(b) of the final
regulations authorizes a scholar to serve in a position in which the
individual spends a majority of his or her time providing special
education, related, or early intervention services. Thus, a former
scholar who provides services under Part B or Part C of IDEA (Part B)
to children with disabilities, would satisfy Sec. 304.23(b)(2) as long
as a majority of his or her students are children with disabilities
receiving Part B or Part C services from the individual
(Sec. 304.23(b)(2)(i)) or the individual expends a majority of his or
her time providing services under Part B or Part C
(Sec. 304.23(b)(2)(ii)).
We believe that it is critical that scholars be required to work
extensively with children with disabilities since the service
obligation requirements in section 673(h) were adopted in response to
the continued shortages of qualified personnel providing special
education, related services, and early intervention services. We also
believe that is critical for personnel providing services under IDEA to
be capable of working with children with disabilities in regular
education settings given the requirement in Part B of IDEA that
children with disabilities be educated, to the maximum extent
appropriate, with nondisabeld children in the regular education
environment. Accordingly, the final regulations permit, as the proposed
regulations would have permitted, a scholar to work with children with
disabilities in the regular education classroom. If the individual's
primary purpose for being in a regular education classroom is to
provide IDEA-related services to children with disabilities, then that
individual would be considered to be providing IDEA services to
children with disabilities during the time the individual is in that
regular education classroom (for purposes of Sec. 304.23(b)(2)(i) or
(b)(2)(ii)), even though one or more nondisabled children may benefit
from that individual working in the classroom. The regulations,
therefore, support the expectation that children with disabilities be
served in the least restrictive environment appropriate to the child.
At the same time, the majority-student or majority-time requirement in
Sec. 304.23(b)(2) ensure that limited IDEA training monies do in fact
benefit the targeted population--children and infants and toddlers with
disabilities.
The final regulations also do not diminish the importance of
regular education teachers being trained to serve children with
disabilities. To the contrary, regular education teachers, and
individuals in regular education training programs, are encouraged to
participate in courses or other aspects of IDEA-funded training
programs. On the other hand, a current regular education teacher who
accepts scholarship assistance under an IDEA personnel training
program, like all other IDEA-funded scholars, must subsequently work in
the special education, related service, or early intervention field (or
payback the scholarship) consistent with the requirements of these
regulations. Because special education teachers, related service and
early intervention service providers, and special education leadership
personnel continue to be in high demand in schools and school districts
across the Nation, directing personnel training funds under IDEA toward
addressing that demand is clearly warranted.
The regulations do not limit a scholar's opportunities for
advancement as long as the position to which the former scholar
advances meets the service obligation requirements in this section. For
example, a former scholar who received training to work with the high-
incidence disability population, subsequently works as a special
education teacher, and then advances into a position as a special
education administrator would continue to meet the requirements in
Sec. 304.23(b)(2) if the majority of students for which the
administrator is responsible are receiving services under either Part B
or C of IDEA. On the other hand, a secondary school principal position,
in which the administrator is responsible for the entire student
population (a majority of which is not disabled) likely would not
qualify as an appropriate work setting under the regulations. Of
course, a former scholar need not work in a qualified setting once the
period of the service obligation has been met or if the individual pays
back the portion of the scholarship that is proportional to the period
for which the service obligation was not completed.
As some commenters noted, a State may serve, through its infant and
toddler program under Part C of the Act, those infants and toddlers in
the State who would be at risk of experiencing substantial
developmental delays without early intervention services. In those
States, these ``at-risk'' infants and toddlers qualify as infants and
toddlers with disabilities and are eligible to receive early
intervention services under Part C. Thus, whether a former scholar of
an early intervention training program who is providing early
intervention services to infants and toddlers with identified
disabilities or developmental delays, and to at-risk infants and
toddlers, would meet the service obligation requirements in this
section of the regulations may depend upon whether the State has
elected to serve at-risk infants and toddlers under Part C of IDEA. If
the State has elected to include the at-risk population under its Part
C program, and the scholar works full-time with that population, then
Sec. 304.23(b)(2) of the regulations would be satisfied. On the other
hand, if the State does not serve at-risk infants and toddlers under
Part C, then the scholar could still satisfy the regulations by serving
mostly Part C-eligible children or spending a majority of his or

[[Page 69142]]

her time providing Part C services to such children under
Sec. 304.23(b)(2)(ii).
Although the critical need for full-time special education, related
service, and early intervention personnel is well-documented, we
recognize that some former scholars may elect, for a variety of
reasons, to work part-time following their training. Thus, we agree
that Sec. 304.23(b)(1)(ii) and (b)(3)(ii) of the proposed regulations
should clarify that part-time employment is authorized. However,
because an individual's service obligation is based on full-time
employment, a part-time worker must still meet the full-time
obligation, by accumulating the periods of part-time work, by the end
of the regulatory time period (i.e., the sum of the number of years
required plus three additional years). For example, a scholar who
received two years of financial assistance would have seven years to
complete a four-year service obligation. If that scholar subsequently
works full-time for an initial two years and half-time for the next
four (i.e., the equivalent of two full-time years), the individual
would meet the service obligation required under this section.
Accordingly, the final regulations authorize individuals to fulfill
their service obligation through employment on a full-time or full-time
equivalent basis. By ``full-time equivalent'' we mean the accumulation
of part-time employment periods to equal full-time employment. What
constitutes ``full-time employment'' is determined by the individual's
employer or the agencies the individual serves, as stated under the
definition of ``full-time'' in Sec. 304.3.
The work requirements in the Act and regulations that apply to
scholarship recipients in leadership training programs enable scholars
to pursue a wide variety of administrative or other leadership
positions related to the provision of services under IDEA. By requiring
leadership program graduates to spend a majority of their time
performing work related to their training, we expect these former
scholars to help address the shortage of qualified supervisory and
policymaking officials, and university faculty, in the special
education, related service, and early intervention fields. As indicated
previously, however, IDEA leadership funds are not intended to pay for
the training of administrators (e.g., principals) who work primarily
with a nondisabled student population (although former scholars can
certainly assume those positions after the period of their service
obligation or by paying back their scholarship). We believe the
proposed regulatory requirements established an appropriate standard
that is sufficiently focused on children with disabilities, yet
provides for limited work in other areas.
We recognize that in some instances individuals may begin, or
already be, working in the special education, related service, or early
intervention fields prior to completing the training program for which
they received scholarship assistance. For example, a current special
education teacher could receive a scholarship to pursue an additional
degree or certificate in special education; or a scholar working toward
a doctorate in a leadership training program may begin teaching in a
university's special education program while completing a dissertation
or other component of a degree. In cases in which a scholarship
recipient is both completing training and working in a job that would
satisfy the service obligation requirements (e.g., the special
education teacher who provides Part B services to a majority of his or
her students), we agree that the regulations should afford some
flexibility to enable individuals to count toward the period of their
service obligation appropriate work performed before the completion of
training. At the same time, it is expected that scholarship recipients
fulfill a service obligation that is sufficiently related to the
training for which assistance was provided. Because some persons may
work in this type of job before completing training, the final
regulations authorize scholars to count toward the period of their
service obligation requirement work that is performed after the
completion of one full-time academic year of training. Of course, the
applicable job must meet the work setting and other requirements in the
regulations, and the individual must fulfill the remaining portion of
the service obligation upon completion of the training.
Assigning responsibility for determining the appropriateness of a
former scholar's work setting to the Department would create additional
burden on scholars and limit the flexibility on grantee institutions
that the Act intentionally provides. Section 673(h) of the Act states
that applicants for IDEA training grants ``will ensure'' that their
scholarship recipients subsequently meet the service obligation
requirements, meaning that the grantee institution is responsible for
determining whether a scholarship recipient has fulfilled his or her
subsequent work obligations under this section of the regulations. The
Act recognizes that the grantee institution is in the best position to
counsel and assist its former scholars in meeting the work
responsibilities that result from receiving an IDEA-funded scholarship.
Moreover, imposing an across-the-board rule for scholarship recipients
to consult the Federal Government regarding the appropriateness of
their work setting would be overly burdensome to scholars. Therefore,
the regulations, consistent with the Act, rely upon the expertise of
the grantee institution to assist its scholar in obtaining an
appropriate job (or jobs) among the many employment options available
to the individual following training.
Statutory intent, as well as the need for program effectiveness and
efficiency, also requires that grantees ensure that their former
scholars fulfill the service obligation requirements in the
regulations. Both the proposed and final regulations are intended to
provide training institutions maximum flexibility to determine, through
the most efficient means possible, the compliance of their scholars
with the applicable statutory and regulatory requirements. Thus, rather
than establishing a specific type of system that grantees must follow,
Sec. 304.23(e) required that grantees establish policies and
procedures, including a ``tracking system,'' to determine the
compliance of their scholars with their service obligations outlined in
the required agreement between each scholar and the grantee. The broad,
flexible language of paragraph (e) was viewed as the least burdensome
means for grantees ``to ensure,'' as the Act requires, that scholarship
recipients fulfill their employment obligations. Nevertheless, the term
``tracking system'' has been removed from the regulations since many
commenters believed that this term suggested a specific and more
complicated procedure than might be necessary for certain institutions
to comply with the Act and regulations. Grantee institutions still
remain responsible for ensuring that their former scholars comply with
the service obligation requirements and for notifying the Department if
a scholar fails to fulfill his or her obligation. Since no specific
type of ``tracking system'' is required, grantees are free to utilize
existing practices at their institution (e.g., alumni office procedures
or university accreditation practices for reporting on the progress and
employment status of former graduates), modify those practices, or
develop new procedures specific to graduates of IDEA training programs.
Regardless of the approach instituted, we expect that the costs
incurred under Sec. 304.23(e) will be primarily the initial costs of
establishing the institution's policies and procedures for following
former scholars.

[[Page 69143]]

The estimates of the time and paperwork burden associated with
implementing Sec. 304.23(e) were developed following a review of the
history of IDEA training programs and available data, including the
number of scholarships awarded by funded projects. We agree that the
relevant burden could depend on the size of the institution and the
number of scholars. It is more likely, however, that the time and
effort needed to follow former scholars will depend upon the
institutions' existing practices and whether those institutions
receiving IDEA training grants can adopt or modify those practices for
purposes of fulfilling their responsibilities under Sec. 304.23 and
other provisions of these regulations. Moreover, the Department intends
to closely monitor the impact of the requirements of this section on
funded projects and to provide technical assistance (e.g., sharing
model procedures of other projects) during the continued implementation
of Sec. 304.23 and of the final regulations as a whole. Aside from the
fact that the Act compels grantee institutions to ensure their
scholars' compliance, we also note that the grantee's procedures for
following former scholars will provide the institution with valuable
evaluative information related to the success of its training program
and the progress of its graduates.
We do recognize, however, that in some instances, an institution
may be unable to locate a former scholar regardless of its persistency
in doing so. If, for example, the institution has sent the scholar a
letter of inquiry and follow-up reminders without receiving any
response, and it cannot otherwise verify that the former scholar has
met the service obligation requirements, then the institution must
notify the Department of the individual's possible noncompliance.
We note that the regulations apply to training program drop-outs in
the same manner as other scholarship recipients. Thus, an individual
receiving financial assistance under an IDEA-funded grant who fails to
satisfy the service obligation must repay the cost of the assistance
consistent with Sec. 304.23(c). We expect that grant applicants,
however, will minimize the number of students who do not complete their
training by accepting, and limiting scholarship assistance to, highly-
qualified students able to sustain satisfactory performance and
complete their program of studies. In addition, grantee institutions
should establish sufficient support services to ensure the success of
their students. We also note that drop-outs who had received
scholarship assistance would not be able to meet their service
obligation (and, therefore, must payback their scholarship) if they are
not qualified to fill available special education, related service, or
early intervention jobs that meet the requirements in Sec. 304.23(b)(2)
or (b)(3)(i).
Changes: Section 304.23(b)(1)(iii) and (b)(3)(iii) have been
revised to clarify that the length of an individual's service
obligation is based on the number of ``academic years'' for which
scholarship assistance was received. Also, Sec. 304.23(b)(2) has been
revised to authorize scholars to work in positions in which the
individual spends a majority of his or her time providing special
education, related, or early intervention services. In addition, a new
paragraph, Sec. 304.23(b)(5), has been added to the final regulations
to allow scholars to count toward their service obligation employment
that meets the regulatory requirements and is performed subsequent to
the completion of one academic year of the training. Finally,
Sec. 304.23(e) of the proposed regulations has been amended by removing
the term ``tracking system'' as a required component of the grantee's
policies and procedures for determining the compliance of scholars with
their regulatory obligations.

Section 304.30 What are the Requirements for Scholars?

Comments: A number of commenters asked that the regulations
highlight the need for scholars to provide information to the grantee
institution following training, including changes in address and the
status of the individual's employment. These commenters emphasized the
importance of former scholars providing this information in order for
institutions to ensure that the service obligation requirements are
being fulfilled.
Discussion: Although the statute requires that grantees ensure that
their scholarship recipients fulfill their service obligation, we
recognize that scholars have a responsibility to keep their
institutions informed of their whereabouts and their progress toward
meeting the work requirements in Sec. 304.23(b). Scholars, therefore,
are expected to provide any information the institution requests that
is needed to determine whether the scholar has fulfilled the service
obligation requirements or needs to repay the scholarship. Moreover,
scholars should keep their institution apprised of changes in address
or job status throughout the period of their service obligation,
enabling institutions to keep track of their former scholars more
readily.
Changes: Section 304.30(f) of the proposed regulations has been
amended to require that a scholar provide his or her training
institution with any requested information that is necessary for the
grantee to determine the scholar's progress in meeting the service
obligation requirements. Also, under Sec. 304.30, a new paragraph (g)
has been added to the final regulations to require that each scholar
notify the grantee institution of changes in address, employment
setting, or employment status during the period of the service
obligation.

Section 304.31 What are the Requirements for Obtaining a Deferral or
Exemption to Performance or Repayment Under an Agreement?

Comments: Some commenters requested that deferral of the service
obligation requirements be authorized for scholars who are pregnant or
have other temporary medical conditions.
Discussion: We do not believe that expanding the bases for
receiving a deferral of the service obligation requirements is needed.
As in the proposed regulations, Sec. 304.23(b) of the final regulations
provides for an additional three years, beyond the number of years
required by the Act, to complete the service obligation. Thus, a
scholar with a four-year service obligation, for example, has seven
years to fulfill that requirement. The additional three-year time
period in the regulations is intended to provide greater flexibility in
meeting the work obligation for those former scholars who become
pregnant, experience short-term illness, relocate, or, for other
reasons, choose not to work full-time or in successive years. In
addition, Sec. 304.31(b) of the regulations authorizes scholars to
obtain a deferral of the service obligation time period (i.e., number
of years required plus three additional years) under different types of
circumstances, including the situation where a disability prevents an
individual from working. Thus, a disabling medical condition may
provide a basis for a deferral.
Changes: None.

Executive Order 12866

We have reviewed these final regulations in accordance with
Executive Order 12866. Under the terms of the order we have assessed
the potential costs and benefits of this regulatory action.
The potential costs associated with the final regulations are those
resulting from statutory requirements and those

[[Page 69144]]

we have determined to be necessary for administering this program
effectively and efficiently.
In assessing the potential costs and benefits--both quantitative
and qualitative--of these final regulations, we have determined that
the benefits of the regulations justify the costs.
We have also determined that this regulatory action does not unduly
interfere with State, local, and tribal governments in the exercise of
their governmental functions.
We summarized the potential costs and benefits of these final
regulations in the preamble to the NPRM published on July 10, 1998 (63
FR 37469).

Paperwork Reduction Act of 1995

The Paperwork Reduction Act of 1995 does not require you to respond
to a collection of information unless it displays a valid OMB control
number. We display the valid OMB control number assigned to the
collection of information in these final regulations at the end of the
affected sections of the regulations.

Intergovernmental Review

This program is subject to the requirements of Executive Order
12372 and the regulations in 34 CFR part 79. The objective of the
Executive order is to foster an intergovernmental partnership and a
strengthened federalism by relying on processes developed by State and
local governments for coordination and review of proposed Federal
financial assistance.
In accordance with the order, we intend this document to provide
early notification of the Department's specific plans and actions for
this program.

Assessment of Educational Impact

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

Electronic Access to This Document

You may view this document, as well as all other Department of
Education documents published in the Federal Register, in text or Adobe
Portable Document Format (PDF) on the Internet at either of the
following sites:

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

To use the PDF you must have the Adobe Acrobat Reader Program with
Search, which is available free at either of the previous sites. If you
have questions about using the PDF, call the U.S. Government Printing
Office (GPO), toll free, at 1-888-293-6498; or in the Washington, D.C.,
area at (202) 512-1530.

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

(Catalog of Federal Domestic Assistance Number 84.325, Personnel
Preparation to Improve Services and Results for Children with
Disabilities.)

List of Subjects in 34 CFR Part 304

Education of individuals with disabilities, Elementary and
secondary education, Grant programs--education, Individuals with
disabilities, Reporting and recordkeeping requirements, Schools.

Dated: December 6, 1999.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
For the reasons discussed in the preamble, the Secretary amends
Title 34 of the Code of Federal Regulations by revising Part 304 to
read as follows:

PART 304--SPECIAL EDUCATION--PERSONNEL PREPARATION TO IMPROVE
SERVICES AND RESULTS FOR CHILDREN WITH DISABILITIES

Subpart A--General

Sec.
304.1 Purpose.
304.2 What is the Special Education--Personnel Preparation to
Improve Services and Results for Children with Disabilities Program?
304.3 What definitions apply to this program?
304.4 What regulations apply to this program?

Subpart B--What Conditions Must Be Met By the Grantee?

304.20 What are the requirements for directing grant funds?
304.21 What are allowable costs?
304.22 What are the requirements for grantees in disbursing
scholarships?
304.23 What assurances must be provided by a grantee that intends
to provide scholarships?

Subpart C--What Conditions Must Be Met By the Scholar?

304.30 What are the requirements for scholars?
304.31 What are the requirements for obtaining a deferral or
exception to performance or repayment under an agreement?
304.32 What are the consequences of a scholar's failure to meet the
terms and conditions of a scholarship agreement?

Authority: 20 U.S.C. 1473, unless otherwise noted.

Subpart A--General

Sec. 304.1 Purpose.

Individuals who receive scholarship assistance from projects funded
under the Special Education--Personnel Preparation to Improve Services
and Results for Children with Disabilities program are required to
complete a service obligation, or repay all or part of the costs of
such assistance, in accordance with section 673(h) of the Individuals
with Disabilities Education Act and the regulations of this part.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.2 What is the Special Education--Personnel Preparation to
Improve Services and Results for Children with Disabilities Program?

The Special Education--Personnel Preparation to Improve Services
and Results for Children with Disabilities Program (program) provides
financial assistance under section 673 of the Act to--
(a) Help address State-identified needs for qualified personnel in
special education, related services, early intervention, and regular
education, to work with children with disabilities; and
(b) Ensure that those personnel have the skills and knowledge,
derived from practices that have been determined, through research and
experience, to be successful, that are needed to serve those children.

(Authority: 20 U.S.C. 1473(a))

Sec. 304.3 What definitions apply to this program?

(a) Definitions in EDGAR. The following terms used in this part are
defined in 34 CFR 77.1:

Applicant
Award
Department
EDGAR
Grantee
Project
Recipient
Secretary

(b) The following definitions apply to this program:
Academic year means--

[[Page 69145]]

(1) A full-time course of study--
(i) Taken for a period totaling at least nine months; or
(ii) Taken for the equivalent of at least two semesters, two
trimesters, or three quarters; or
(2) For a part-time student, the accumulation of periods of part-
time courses of study that is equivalent to an ``academic year'' under
paragraph (b)(1) of this section.
Act means the Individuals with Disabilities Education Act, 20
U.S.C. 1400 et seq.
Early intervention services means early intervention services as
defined in section 632(4) of the Act.
Full-time, for purposes of determining whether an individual is
employed full-time in accordance with Sec. 304.23, means a full-time
position as defined by the individual's employer or by the agencies
served by the individual.
Payback means monetary repayment of scholarship assistance in lieu
of completion of a service obligation.
Related services means related services as defined in section
602(22) of the Act.
Scholar means an individual who is pursuing a degree, license,
endorsement, or certification related to special education, related
services, or early intervention services and who receives scholarship
assistance under this part.
Scholarship means financial assistance to a scholar for training
under the program and includes all disbursements or credits for
tuition, fees, student stipends, and books, and travel in conjunction
with training assignments.
Service obligation means a scholar's employment obligation, as
described in section 673(h) of the Act and Sec. 304.23(b).
Special education means special education as defined in section
602(25) of the Act.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.4 What regulations apply to this program?

The following regulations apply to this program:
(a) The Education Department General Administrative Regulations
(EDGAR) in the following parts of title 34 of the Code of Federal
Regulations:
(1) Part 74 (Administration of Grants to Institutions of Higher
Education, Hospitals, and Nonprofit Organizations).
(2) Part 75 (Direct Grant Programs).
(3) Part 77 (Definitions That Apply to Department Regulations).
(4) Part 79 (Intergovernmental Review of Department of Education
Programs and Activities).
(5) Part 80 (Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments).
(6) Part 81 (General Education Provisions Act--Enforcement).
(7) Part 82 (New Restrictions on Lobbying).
(8) Part 85 (Governmentwide Debarment and Suspension
(Nonprocurement) and Governmentwide Requirements for Drug-Free
Workplace (Grants)).
(9) Part 86 (Drug-Free Schools and Campuses).
(10) Part 97 (Protection of Human Subjects).
(11) Part 98 (Student Rights in Research, Experimental Programs and
Testing).
(12) Part 99 (Family Educational Rights and Privacy).
(b) The regulations in this part 304.

(Authority: 20 U.S.C. 1473; 20 U.S.C. 3474(a))

Subpart B--What Conditions Must Be Met By the Grantee?

Sec. 304.20 What are the requirements for directing grant funds?

(a) The Secretary, as appropriate, identifies in a notice published
in the Federal Register, the percentage (up to 75 percent) of a total
award under the program that must be used to support scholarships as
defined in Sec. 304.3.
(b) The Secretary may award a grant that uses a percentage for
scholarships, as determined by the Secretary, that is lower than that
published under paragraph (a) of this section in exceptional
circumstances if the Secretary determines that such an exception is
necessary to achieve the purposes of the program.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.21 What are allowable costs?

In addition to the allowable costs established in the Education
Department General Administrative Regulations in 34 CFR 75.530 through
75.562, the following items are allowable expenditures by projects
funded under the program:
(a) Tuition and fees.
(b) Student stipends and books.
(c) Travel in conjunction with training assignments.

(Authority: 20 U.S.C. 1473(h))

Sec. 304.22 What are the requirements for grantees in disbursing
scholarships?

Before disbursement of scholarship assistance to an individual, a
grantee must--
(a) Ensure that the scholar--
(1) Is a citizen or national of the United States;
(2) Is a permanent resident of--
(i) Puerto Rico, the United States Virgin Islands, Guam, American
Samoa, or the Commonwealth of the Northern Mariana Islands; or
(ii) The Republic of the Marshall Islands, the Federated States of
Micronesia, or the Republic of Palau (during the period in which these
entities are eligible to receive an award under the program); or
(3) Provides evidence from the U.S. Immigration and Naturalization
Service that the individual is--
(i) A lawful permanent resident of the United States; or
(ii) In the United States for other than a temporary purpose with
the intention of becoming a citizen or permanent resident.
(b) Limit scholarship assistance to the amount by which the
individual's cost of attendance at the institution exceeds the amount
of grant assistance the scholar is to receive for the same academic
year under Title IV of the Higher Education Act; and
(c) Obtain a Certification of Eligibility for Federal Assistance
from each scholar, as prescribed in 34 CFR 75.60, 75.61, and 75.62.

(Approved by the Office of Management and Budget under control
number 1820-0622)

(Authority: 20 U.S.C. 1473)

Sec. 304.23 What assurances must be provided by a grantee that intends
to provide scholarships?

Before receiving an award, a grantee that intends to grant
scholarships under the program must assure that the following
requirements will be satisfied:
(a) Requirement for agreement. Each scholar who will receive a
scholarship must first enter into a written agreement with the grantee
that contains the terms and conditions required by this section.
(b) Terms of the agreement. Each agreement under paragraph (a) of
this section must contain, at a minimum, the following provisions:
(1) Individuals who receive scholarship assistance from projects
funded under section 673(b) and (e), and to the extent determined
appropriate by the Secretary, section 673(d), of the Act will
subsequently maintain employment--
(i) In which the individual provides special education or related
services to children with disabilities or early intervention services
to infants and toddlers, and their families;
(ii) On a full-time or full-time equivalent basis; and
(iii) For a period of at least two years for every academic year
for which assistance was received.
(2) In order to meet the requirements of paragraph (b)(1) of this
section, an

[[Page 69146]]

individual must be employed in a position in which--
(i) A majority of the persons to whom the individual provides
services are receiving from the individual special education, related
services, or early intervention services; or
(ii) The individual spends a majority of his or her time providing
special education or related services to children with disabilities or
early intervention services to infants and toddlers with disabilities.
(3) Individuals who receive scholarship assistance from a
leadership preparation project funded under section 673(c) of the Act
will subsequently maintain employment--
(i) In which the individual expends a majority of his or her time
performing work related to the individual's preparation;
(ii) On a full-time or full-time equivalent basis; and
(iii) For a period of at least two years for every academic year
for which assistance was received.
(4) A scholarship recipient must complete the service obligation
under paragraph (b)(1)(iii) or (b)(3)(iii) of this section within the
period ending not more than the sum of the number of years required in
paragraph (b)(1)(iii) or (b)(3)(iii) of this section, as appropriate,
plus three additional years, from the date the recipient completes the
training for which the scholarship assistance was awarded.
(5) Employment that meets the requirements of paragraph (b) of this
section, and is performed by a scholar subsequent to the completion of
one academic year of the training for which the scholarship assistance
was received, can be used to meet, in part, the period of the scholar's
service obligation under paragraph (b)(1)(iii) or (b)(3)(iii) of this
section.
(6) The service obligation in paragraph (b) of this section, as
applied to a part-time scholar, is based on the accumulated academic
years of training for which the scholarship is received.
(c) Repayment. (1) Subject to the provisions in Sec. 304.31
regarding a deferral or exception, a scholar who does not fulfill the
requirements in paragraph (b)(1) or (b)(3) of this section, as
appropriate, must repay all or part of any scholarship received, plus
interest.
(2) The amount of the scholarship that has not been retired through
eligible service will constitute a debt owed to the United States
that--
(i) Will be repaid by the scholar in accordance with Sec. 304.32;
and
(ii) May be collected by the Secretary in accordance with 34 CFR
part 30, in the case of the scholar's failure to meet the obligation of
Sec. 304.32.
(d) Standards for satisfactory progress. The grantee must
establish, notify students of, and apply reasonable standards for
measuring whether a scholar is maintaining satisfactory progress in the
scholar's course of study;
(e) Compliance. The grantee must establish policies and procedures
to determine compliance of scholars with the terms of the written
agreement developed under this section;
(f) Exit certification. The grantee must establish policies and
procedures for receiving written certification from scholars at the
time of exit from the program that identifies--
(1) The number of years the scholar needs to work to satisfy the
work requirements in paragraph (b) of this section.
(2) The total amount of scholarship assistance received subject to
the work-or-repay provision in paragraph (b) of this section.
(3) The time period, consistent with paragraph (b)(1)(iii) or
(b)(3)(iii) of this section, during which the scholar must satisfy the
work requirements in paragraph (b) of this section.
(4) All other obligations of the scholar under this section.
(g) Information. The grantee must provide, upon request of the
Secretary, information, including records maintained under paragraphs
(e) and (f) of this section, that is necessary to carry out the
Secretary's functions under this part.
(h) Records. The grantee must maintain the information under this
section related to a scholar for a period of time equal to the time
required to fulfill the obligation under paragraph (b) of this section.
(i) Notification. The grantee must inform the Secretary if a
scholar fails to fulfill or chooses not to fulfill the obligation under
paragraph (b)(1) or (b)(3) of this section.

(Approved by the Office of Management and Budget under control
number 1820-0622)

(Authority: 20 U.S.C. 1473(h))

Subpart C--What Conditions Must Be Met By the Scholar?

Sec. 304.30 What are the requirements for scholars?

A scholar must--
(a) Be enrolled in a course of study leading to a degree,
certificate, endorsement, or license related to special education,
related services, or early intervention services in order to be
eligible to receive a scholarship under the program;
(b) Enter into a written agreement with the grantee that meets the
terms and conditions of Sec. 304.23 of this part before starting
training;
(c) Receive the training at the educational institution or agency
designated in the scholarship;
(d) Not accept payment of educational allowances from any other
entity if that allowance conflicts with the scholar's obligation under
this part;
(e) Maintain satisfactory progress toward the degree, certificate,
endorsement, or license as determined by the grantee;
(f) Provide the grantee all requested information necessary to
determine the scholar's progress in meeting the service obligation
under Sec. 304.23(b); and
(g) Notify the grantee of changes in address, employment setting,
or employment status during the period of the scholar's service
obligation under Sec. 304.23(b).

(Approved by the Office of Management and Budget under control
number 1820-0622)

(Authority: 20 U.S.C. 1473(h))

Sec. 304.31 What are the requirements for obtaining a deferral or
exception to performance or repayment under an agreement?

(a) An exception to the repayment requirement in Sec. 304.23(c) may
be granted, in whole or part, if the scholar--
(1) Is unable to continue the course of study or perform the
service obligation because of a disability that is expected to continue
indefinitely; or
(2) Has died.
(b) Deferral of the repayment requirement in Sec. 304.23(c) may be
granted during the time the scholar--
(1) Is engaging in a full-time course of study at an institution of
higher education;
(2) Is serving, not in excess of three years, on active duty as a
member of the armed services of the United States;
(3) Is serving as a volunteer under the Peace Corps Act;
(4) Is serving as a full-time volunteer under Title I of the
Domestic Volunteer Service Act of 1973;
(5) Has a disability which prevents the individual from working,
for a period not to exceed three years; or
(6) Is unable to secure employment as required by the agreement by
reason of the care provided to a disabled family member for a period
not to exceed 12 months.
(c) Deferrals or exceptions to performance or repayment may be
provided by grantees based upon sufficient evidence to substantiate the
grounds for an exception under paragraph (a) of this section or a
deferral under paragraph (b) of this section.

(Approved by the Office of Management and Budget under control
number 1820-0622)

[[Page 69147]]

(Authority: 20 U.S.C. 1473(h))

Sec. 304.32 What are the consequences of a scholar's failure to meet
the terms and conditions of a scholarship agreement?

If a scholar fails to meet the terms and conditions of a
scholarship agreement under Sec. 304.23(b) or to obtain a deferral or
an exception as provided in Sec. 304.31, the scholar must repay all or
part of the scholarship assistance to the Secretary as follows:
(a) Amount. The amount of the scholarship to be repaid is
proportional to the service obligation not completed.
(b) Interest Rate. The Secretary charges the scholar interest on
the unpaid balance owed in accordance with 31 U.S.C. 3717.
(c) Interest accrual. (1) Interest on the unpaid balance accrues
from the date the scholar is determined to have entered repayment
status under paragraph (e) of this section.
(2) Any accrued interest is capitalized at the time the scholar's
repayment schedule is established.
(3) No interest is charged for the period of time during which
repayment has been deferred under Sec. 304.31.
(d) Collection costs. Under the authority of 31 U.S.C. 3717, the
Secretary may impose reasonable collection costs.
(e) Repayment status. A scholar enters repayment status on the
first day of the first calendar month after the earliest of the
following dates, as applicable:
(1) The date the scholar informs the grantee that he or she does
not plan to fulfill the service obligation under the agreement.
(2) Any date when the scholar's failure to begin or maintain
employment makes it impossible for that individual to complete the
service obligation within the number of years required in
Sec. 304.23(b).
(3) Any date on which the scholar discontinues enrollment in the
course of study under Sec. 304.30(a).
(f) Amounts and frequency of payment. The scholar must make
payments to the Secretary that cover principal, interest, and
collection costs according to a schedule established by the Secretary.

(Approved by the Office of Management and Budget under control
number 1820-0622)

(Authority: 20 U.S.C. 1473(h))

[FR Doc. 99-31951 Filed 12-8-99; 8:45 am]
BILLING CODE 4000-01-U