Office of Postsecondary Education - U.S. Department of Education

Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulations66931WReier-Aviles on DSKGBLS3C1PROD with RULES2In addition, an institution must returnany Direct Loan funds that werecredited to the student’s account at theinstitution for the payment period orperiod of enrollment. For any DirectLoan funds disbursed directly to astudent, the institution must notify theDepartment of the loan funds that areoutstanding, so that the Department canissue a 30-day demand letter to thestudent under 34 CFR 685.211. If theinstitution knew prior to disbursing anyof the Direct Loan funds directly to thestudent that he or she would not beginattendance, the institution must alsoreturn those Direct Loan funds. Thiswould apply when, for example, astudent had previously notified theinstitution that he or she would not beattending or the institution had expelledthe student before disbursing the DirectLoan directly to the student.When an institution is responsible forreturning title IV, HEA program fundsfor a student who failed to beginattendance at the institution it mustreturn those funds as soon as possible,but no later than 30 days after the datethat the institution becomes aware thatthe student will not or has not begunattendance. The funds that are requiredto be returned by the institution are nota student title IV, HEA liability and willnot affect the student’s title IV, HEAeligibility. However, institutionalcharges not paid by financial assistanceare a student liability owed to theinstitution and subject to its owncollection process.The new requirement also does notchange the regulations in 34 CFR 668.22on handling the Return of Title IV Aidwhen a student began attendance butwithdraws from the payment period orperiod of enrollment. If the institutionprovides a bookstore voucher for astudent to obtain or purchase books andsupplies, those expenses for therequired course materials are consideredinstitutional charges because thestudent does not have a real andreasonable opportunity to purchase thematerials from any other place exceptthe institution. The institution mustinclude the charges for books andsupplies from a bookstore voucher asinstitutional charges in determining theportion of unearned title IV, HEAprogram assistance that the institution isresponsible for returning. However, aninstitution does not have to select thebookstore voucher as the way to meetthe new requirement, it is just oneoption.Changes: None.Comment: One commenter opinedthat students who are not Pell Granteligible would be unfairly responsiblefor obtaining funds to purchase bookswhile others at the same institutionwould be confused about who should orshould not receive the means to obtainor purchase books and supplies at thebeginning of the term or enrollmentperiod. A few commenters suggested orasked whether a student could opt outof the way offered by an institution toobtain or purchase books and supplies.Some commenters asked if theproposed regulations were in conflictwith the current Cash Managementregulations in §§ 668.164 and 668.165.A few commenters requestedclarification on how studentauthorizations applied to the newrequirements. Some commenterssuggested that an institution should notbe required to obtain a student’sauthorization to credit his or heraccount at the institution with title IV,HEA program funds for books andsupplies, while other commentersrecommended that an institution shouldbe able to require the student’sauthorization before advancing fundsfor books and supplies.Discussion: Under § 668.16(h), aninstitution is required to provideadequate financial aid counseling toeligible students who apply for title IV,HEA program assistance and under§ 668.42, an institution is required toprovide consumer information toenrolled and prospective students that,among other things, describe themethod by which aid is determined anddisbursed, delivered, or applied to astudent’s account and the frequency ofthose disbursements. Further under§ 668.165(a)(1), before an institutiondisburses title IV, HEA funds it mustnotify a student how and when thosefunds will be disbursed. Based on theserequirements, an institution mustdescribe in its financial aid informationand its notifications provided tostudents receiving title IV, HEA fundsthe way under § 668.164(i) that itprovides for Federal Pell Grant eligiblestudents to obtain or purchase requiredbooks and supplies by the seventh dayof a payment period under certainconditions. The information mustindicate whether the institution wouldenter a charge on the student’s accountat the institution for books and suppliesor pay funds to the student directly.Institutions also routinely counselstudents about the variations in theamounts of Federal student aid or otherresources that are available to thembased upon their need and expectedfamily contribution. We believe that thiscounseling process will mitigate anyconfusion by explaining to a studentwho qualifies for funds advanced topurchase books and supplies, how theprocess is handled at the institution,VerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2and how a student may opt-out of theprocess.Regardless of the way an institutionprovides for a student to obtain booksand supplies, the student may opt out.For instance, if an institution providesa bookstore voucher, the student mayopt out by not using the voucher. If theinstitution uses another way, such as abank-issued stored-value or prepaiddebit card, it must have a policy underwhich the student may opt out. Forexample, a student might have to notifythe institution by a certain date so thatthe institution does not unnecessarilyissue a check to the student or transferfunds to the student’s bank account. Inany case, if the student opts out, theinstitution may, but is not required to,offer the student another way topurchase books and supplies so long asit does not otherwise delay providingfunds to the student as a credit balance.We are amending the regulations toclarify that a student may opt out of theway that an institution provides for astudent to obtain books and supplies.In addition, to facilitate advancingfunds or credit by the seventh day ofclasses of a payment period under thisprovision, the Department considersthat a student authorizes the use of titleIV, HEA funds at the time the studentuses the method provided by theinstitution to purchase books andsupplies. This means that an institutiondoes not need to obtain a writtenauthorization under §§ 668.164(d)(1)(iv)and 668.165(b) from the student tocredit a student’s account at theinstitution for the books and suppliesthat may be provided only under§ 668.164(i). We are amending theregulations to indicate that aninstitution does not need to obtain awritten authorization from a student tocredit the student’s account at theinstitution for books and suppliesprovided under § 668.164(i).Changes: Section 668.164(i) has beenrevised to specify that an institutionmust have a policy under which aFederal Pell Grant eligible student mayopt out of the way the institutionprovides for the student to purchasebooks and supplies by the seventh dayof classes of a payment period. Inaddition, § 668.164(i) has been revisedto specify that if the Federal Pell Granteligible student uses the methodprovided by the institution to purchasebooks and supplies, the student isconsidered to have authorized the use oftitle IV, HEA funds and the institutiondoes not need to obtain a writtenauthorization under §§ 668.164(d)(1)(iv)and 668.165(b) for this purpose only.