Federal Register: March 21, 2008

Volume 73, Number 56

[Notices]

[Page 15335-15374]

[This PDF version of document with internal links that allow you to move from the beginning of the document to the table of contents of the TEACH proposed rule language. There is also a bookmark added to take you to the table of contents, which you can use no matter where you are in the document by opening bookmarks on the left tab. The table of contents is also linked to respective sections of the rules, and links have been added to take you back and forth between the discussion of sections in the preamble and the corresponding proposed rule language. The links going from the preamble to the rule are highlighted in yellow; the links from the rule to the preamble are boxed.]

Part III

Department of Education



34 CFR Parts 668, 673, 674, et al.

The Teacher Education Assistance for College and Higher Education
(TEACH) Grant Program and Other Federal Student Aid Programs; Proposed
Rule

[[Page 15336]]



DEPARTMENT OF EDUCATION

34 CFR Parts 668, 673, 674, 675, 676, 682, 685, 686, and 690

RIN 1840-AC93
[Docket ID ED-2008-OPE-0001]

The Teacher Education Assistance for College and Higher Education
(TEACH) Grant Program and Other Federal Student Aid Programs

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.



SUMMARY: The Secretary proposes to amend title 34 of the Code of
Federal Regulations to establish regulations for the Teacher Education
Assistance for College and Higher Education (TEACH) Grant Program. The
TEACH Grant program is a non-need-based grant program that provides up
to $4,000 per year to students who are enrolled in an eligible program
and who agree to teach in a high-need field, at a low-income elementary
or secondary school for at least four years within eight years of
completing the program for which the TEACH Grant was awarded. If the
grant recipient fails to complete the required teaching service, the
TEACH grant is treated as a Federal Direct Unsubsidized Stafford Loan
(Federal Direct Unsubsidized Loan). The Secretary also proposes to
amend the regulations related to the Student Assistance General
Provisions; the General Provisions for the Federal Perkins Loan
Program, the Federal Work-Study Program, the Federal Supplemental
Educational Opportunity Grant Program; the Federal Perkins Loan
Program; the Federal Work-Study Programs; the Federal Supplemental
Educational Opportunity Grant Program; the Federal Family Education
Loan (FFEL) Program; the William D. Ford Federal Direct Loan Program;
and the Federal Pell Grant Program to implement the TEACH Grant
Program. These proposed regulations are needed to implement provisions
of the Higher Education Act of 1965 (HEA), as amended by the College
Cost Reduction and Access Act of 2007 (CCRAA).

DATES: We must receive your comments on or before April 21, 2008.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments by fax or by e-mail. Please submit your comments only
one time, in order to ensure that we do not receive duplicate copies.
In addition, please include the Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to
    http://www.regulations.gov
    to submit your comments electronically. Information
on using Regulations.gov, including instructions for accessing agency
documents, submitting comments, and viewing the docket, is available on
the site under "How To Use This Site."
     Postal Mail, Commercial Delivery, or Hand Delivery. If you
mail or deliver your comments about these proposed regulations, address
them to Michelle Belton, U.S. Department of Education, 1990 K Street,
NW., room 8031, Washington, DC 20006-8502.

    Privacy Note: The Department's policy for comments received from
members of the public (including those comments submitted by mail,
commercial delivery, or hand delivery) is to make these submissions
available for public viewing on the Federal eRulemaking Portal at
http://www.regulations.gov.
All submissions will be posted to the
Federal eRulemaking Portal without change, including personal
identifiers and contact information.


FOR FURTHER INFORMATION CONTACT: Michelle Belton, U.S. Department of
Education, 1990 K Street, NW., room 8031, Washington, DC 20006-8502.
Telephone: (202) 502-7821 or via the Internet at:
Michelle.Belton@ed.gov.
    If you use a telecommunications device for the deaf, call the
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
    Individuals with disabilities can obtain this document in an
alternative format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed under FOR FURTHER
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Invitation To Comment

    As outlined in the section of this notice entitled "Negotiated
Rulemaking," significant public participation, through three public
hearings and three negotiated rulemaking sessions, has occurred in
developing this notice of proposed rulemaking (NPRM). Therefore, in
accordance with the requirements of the Administrative Procedure Act,
the Department invites you to submit comments regarding these proposed
regulations on or before April 21, 2008. To ensure that your comments
have maximum effect in developing the final regulations, we urge you to
identify clearly the specific section or sections of the proposed
regulations that each of your comments addresses and to arrange your
comments in the same order as the proposed regulations.
    We invite you to assist us in complying with the specific
requirements of Executive Order 12866, including its overall
requirements to assess both the costs and the benefits of the intended
regulation and feasible alternatives, and to make a reasoned
determination that the benefits of this intended regulation justify its
costs. Please let us know of any further opportunities we should take
to reduce potential costs or increase potential benefits while
preserving the effective and efficient administration of the programs.
    During and after the comment period, you may inspect all public
comments about these proposed regulations by accessing Regulations.gov.
You may also inspect the comments, in person, in room 8031, 1990 K
Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m.,
Eastern time, Monday through Friday of each week except Federal
holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking
Record

    On request, we will supply an appropriate aid, such as a reader or
print magnifier, to an individual with a disability who needs
assistance to review the comments or other documents in the public
rulemaking record for these proposed regulations. If you want to
schedule an appointment for this type of aid, please contact the person
listed under FOR FURTHER INFORMATION CONTACT.

Negotiated Rulemaking

    Section 492 of the HEA requires the Secretary, before publishing
any proposed regulations for programs authorized by Title IV of the
HEA, to obtain public involvement in the development of the proposed
regulations. After obtaining advice and recommendations from the
public, including individuals and representatives of groups involved in
the Federal student financial assistance programs, the Secretary must
subject the proposed regulations to a negotiated rulemaking process.
All proposed regulations that the Department publishes on which the
negotiators reached consensus must conform to final agreements
resulting from that process unless the Secretary reopens the process or
provides a written explanation to the participants stating why the
Secretary has decided to depart from the agreements. Further
information on the negotiated rulemaking process can be found at:

[[Page 15337]]

http://www.ed.gov/policy/highered/reg/hearulemaking/2008/index2008.html.
    On October 22, 2007, the Department published a notice in the
Federal Register (72 FR 59494) announcing our intent to establish up to
two negotiated rulemaking committees to prepare proposed regulations.
One committee would focus on issues related to the new TEACH Grant
program (TEACH Grant Committee). A second committee would address
Federal student loans. The notice requested nominations of individuals
for membership on the committees who could represent the interests of
key stakeholder constituencies on each committee. The TEACH Grant
Committee met to develop proposed regulations twice during the month of
January, 2008 and once in early February, 2008. This NPRM proposes
regulations relating to the administration of the TEACH Grant program.
    The Department developed a list of proposed regulatory provisions
for the TEACH Grant program from advice and recommendations submitted
by individuals and organizations in testimony submitted to the
Department in a series of three public hearings held on:
     November 2, 2007, at the Sheraton New Orleans, New
Orleans, Louisiana.
     November 16, 2007, at the U.S. Department of Education in
Washington, DC.
     November 29, 2007, at the Manchester Grand Hyatt San
Diego, San Diego, California.
    In addition, the Department accepted written comments on possible
regulatory provisions submitted directly to the Department by
interested parties and organizations. A summary of all comments
received orally and in writing is posted as background material in the
docket. Transcripts of the regional meetings can be accessed at
http://www.ed.gov/policy/highered/reg/hearulemaking/2008/index2008.html.
    Staff within the Department also identified issues for discussion
and negotiation.
    At its first meeting, the TEACH Grant Committee reached agreement
on its protocols and proposed agenda. These protocols provided that the
non-Federal negotiators would participate in the negotiated rulemaking
process based on their experience and expertise.
    The TEACH Grant Committee included the following members:
     Dr. Nell Ingram, Dallas Independent School District and
Judy Corcillo (alternate), National Association for Alternative
Certification.
     Donna Harris-Aikens, National Education Association and
James Rice (alternate), Quinsigamond Community College.
     Dr. William H. Graves, III, Darden College of Education,
Old Dominion University and Dr. J. Roberts Hendricks (alternate),
College of Education, University of Arizona.
     Dr. Sandra Robinson, College of Education, University of
Central Florida and Dr. Jane West (alternate), American Association of
Colleges for Teacher Education.
     Joseph Pettibon, Texas A&M University and Beth Stack
(alternate), University of Pittsburgh.
     Dr. Herbert Brunkhorst, California State University San
Bernardino and Janis Lariviere (alternate), Teacher Development Center
for Science Education, University of Kansas.
     Janet Dodson, Doane College and Bernard A. Pekala, Jr.
(alternate), Boston College.
     Ellis Salim, Baker College and Maureen Budetti
(alternate), National Association of Independent Colleges and
Universities.
     Scott Fleming, Georgetown University and Thomas O'Neill
(alternate), Association of Independent Colleges and Universities of
Nebraska.
     Mary Dorrell, Career Education Corporation and Tammy
Halligan (alternate), Career College Association.
     Patrick Moore, Delaware Technical and Community College.
     Jim Hermes, American Association of Community Colleges and
Julia Brown (alternate), Northern Virginia Community College.
     Carmen Berkley, United States Student Association and
Cedric Lawson (alternate), United Council of University of Wisconsin
Students.
     Terry Hartle, American Council on Education and Cyndy
Littlefield (alternate), Association of Jesuit Colleges and
Universities.
     Gail McLarnon, U.S. Department of Education.
    During its meetings, the TEACH Grant Committee reviewed and
discussed drafts of proposed regulations. At the final meeting in
February 2008, the TEACH Grant Committee reached consensus on all of
the proposed regulations in this document. More information on the work
of the TEACH Grant Committee can be found at:
http://www.ed.gov/policy/highered/reg/hearulemaking/2008/teach.html.
    The Secretary bases these proposed regulations for the TEACH Grant
program on the regulations of the Federal Pell Grant program or the
William D. Ford Federal Direct Loan (Direct Loan) program as
appropriate given the similar nature of these programs. Like the
Federal Pell Grant program, the TEACH Grant program provides for direct
grants from the Federal government to students to assist in paying
their college expenses. However, unlike the Federal Pell Grant program,
the TEACH Grant program requires grant recipients to complete a service
obligation consisting of four years of teaching in a high-need field at
a low-income elementary or secondary school within eight years of
completing the program of study for which the TEACH Grant was given. If
a recipient fails to complete this service obligation, the TEACH Grant
converts to a Federal Direct Unsubsidized Loan.
    Under the proposed regulations, the Secretary would deliver funds
using the same system as used for the Federal Pell Grant and Direct
Loan programs. This will allow the coordination of administrative
requirements and will assist participating institutions in
administering the program, reduce the institutional administrative
burden and paperwork, and simplify the application process for
students. Accordingly, these proposed regulations would include the
following definitions, without changes, from the Federal Pell Grant
program regulations in 34 CFR 690.2:

Institutional Student Information Record (ISIR) Payment Data

Student Aid Report (SAR)

    In addition, the substance of proposed Sec. Sec.  686.5, 686.22(a)
through (f), 686.25, 686.30, 686.33, 686.34, 686.35, 686.36 and 686.38
reflect the Pell Grant requirements in 34 CFR 690.8, 690.63(a) through
(f), 690.66, 690.71, 690.76, 690.79, 690.80(a) and (b), 690.81, and
690.82. We have included these specific Pell Grant requirements in the
text of the proposed TEACH Grant regulations to provide a complete
description in part 686 of the program-specific requirements for the
TEACH Grant program. Other sections of the proposed TEACH Grant program
regulations reflect the Federal Pell Grant program requirements and the
William D. Ford Federal Direct Loan program requirements to the extent
practicable.

Significant Proposed Regulations

    We group major issues according to subject, with appropriate
sections of the proposed regulations referenced in parenthesis. We
discuss substantive issues under the sections of the proposed
regulations to which they pertain.

Late Disbursements (Sec.  668.164(g))

    Statute: The HEA does not specifically address the issue of late
disbursements of TEACH Grants.

[[Page 15338]]

    Proposed Regulations: Current 34 CFR 668.164(g) allows a student
who is no longer eligible to receive Title IV, HEA program funds to
qualify for those funds if certain conditions are satisfied; for
example, the institution receiving a SAR or an ISIR with an official
expected family contribution. Current Sec.  668.164(g) also specifies
the affected programs. The proposed regulations would add the TEACH
Grant program to the list in Sec.  668.164(g) of programs for which a
student becomes ineligible when the student is no longer enrolled at
the institution for the award year. The proposed regulations would also
describe how TEACH Grant recipients may qualify for a late
disbursement.
    Reason: For a student to be considered eligible for a late
disbursement of Title IV aid, the institution must have received a SAR
or an ISIR with an official expected family contribution (EFC) and must
originate the award before the student became ineligible. For TEACH
Grant purposes, "originate" means that the student meets the
eligibility requirements of Sec.  686.11, including signing the service
agreement.

Calculating and Applying Cohort Default Rates (Sec.  668.183)

    Statute: Section 435(m) of the HEA defines cohort default rate
calculation procedures.
    Proposed Regulations: We are proposing to amend current 34 CFR
668.183 to specify that for purposes of calculating an institution's
cohort default rate, a TEACH Grant that has been converted to a Federal
Direct Unsubsidized Loan is not included.
    Reason: In the case of a student whose TEACH Grant is converted to
a Federal Direct Unsubsidized Loan and who defaults on that loan, the
Secretary does not believe that the loan should be included in the
institution's cohort default rate calculation. The TEACH Grant award is
originally made to the student as a grant and converts to a loan only
after the student takes (or fails to take) certain actions. This
conversion may occur many years after the award is made. Including the
loan in the calculation of the rate at this stage in the process would
not serve the purposes of the cohort default rate. The cohort default
rates are a measure of an institution's administrative capability to
control defaults to the extent the rates are calculated on data
reasonably related to the period of a student's attendance at an
institution. The conversion of TEACH Grants to Direct Loans will
generally occur at a significantly later point in time than would be
reasonable to include in an institution's cohort default rate.

Overaward (Sec.  673.5)

    Statute: Section 420M(c)(2) of the HEA provides that the TEACH
Grant, in combination with Federal assistance and other student
assistance, may not exceed the student's cost of attendance.
    Proposed Regulations: We are proposing to amend current 34 CFR
673.5(c) to include the amount of any TEACH Grant in the types of funds
that may be used to replace a student's EFC and to clarify that any
amount in excess of a student's EFC is considered estimated financial
assistance.
    Reason: TEACH Grants are not awarded based on need and therefore
are permitted to replace a student's EFC. As with other forms of aid
that may replace EFC, any TEACH Grant amount in excess of the EFC is
considered estimated financial assistance.

Part 686--Teacher Education Assistance for College and Higher Education
(TEACH) Grant Program

Definitions (Sec.  686.2)

Academic Year or Its Equivalent for Elementary and Secondary Schools
(Elementary or Secondary Academic Year)

    Statute: Section 420N(b)(1)(A) of the HEA provides that a grant
recipient must serve as a full-time teacher for a total of not less
than four academic years within eight years after completing the
program of study for which he or she received a TEACH grant.
    Proposed Regulations: Proposed Sec.  686.2 would provide a
definition of academic year or its equivalent for elementary and
secondary schools (elementary or secondary academic year) for purposes
of the TEACH Grant program. An academic year for elementary and
secondary schools would be one complete school year or two complete and
consecutive half-years from different school years, excluding summer
sessions, that generally fall within a 12-month period. If a school has
a year-round program of instruction, the Secretary would consider a
minimum of nine consecutive months to be the equivalent of an academic
year.
    Reasons: This proposed definition is adopted from the definition of
the term "academic year" used for purposes of determining teacher
loan forgiveness in the Federal Family Education Loan (FFEL) program
regulations in 34 CFR 682.215(b). Using the same definition for the
TEACH Grant program would ensure equity in that the service performed
by participants in both of these programs would be calculated in the
same manner. Several non-Federal negotiators suggested removing the
word "consecutive" from the first paragraph of the definition and
eliminating the exclusion of summer sessions. The Secretary believes
that these suggested changes would effectively allow a grant recipient
to complete the four-year service obligation in less than four years,
contrary to the TEACH Grant provisions in the statute. The Secretary is
further concerned that full-time teaching in a summer session is not
equivalent to full-time teaching in a regular school term.
    Some non-Federal negotiators requested that the term
"consecutive" be removed from the second paragraph of the definition,
which deals with a year-round program of instruction. These negotiators
expressed concern that, because some year-round calendars punctuate the
months of instruction with breaks of several weeks in length, year-
round calendars may not technically meet the requirement for a minimum
of nine consecutive months to be the equivalent of an academic year.
The Department has decided not to remove the word "consecutive"
because that would make this definition inconsistent with the one used
for purposes of the teacher loan forgiveness in the FFEL program. That
definition has been in use for several years without causing any
difficulties. However, the Secretary would consider nine months of
full-time teaching within a 12-month period in a year-round program the
equivalent of an academic year for purposes of the TEACH Grant program.

Annual Award and Scheduled Award

    Statute: Section 420M(a)(1) of the HEA establishes $4,000 as the
amount a TEACH Grant-eligible student may receive for a year, and
section 420M(c)(1) of the HEA provides that awards for part-time
attendance are reduced in proportion to a student's less-than-full-time
enrollment status.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
Scheduled Award as the maximum amount of a TEACH Grant that a full-time
student could receive for a year and the term an annual award as the
maximum TEACH Grant amount a student would receive for enrolling as a
full-time, three-quarter-time, half-time, or less-than-half-time
student and remaining in that enrollment status for a year.
    Reason: These definitions, in conjunction with the provisions of
subpart C of the proposed regulations (Determination of Awards) would

[[Page 15339]]

ensure compliance with the statutory requirements that a TEACH Grant-
eligible student receive an award of $4,000 for attendance during a
year and that a student's payments be adjusted based on the student's
enrollment status during a payment period.

Elementary School

    Statute: Section 420N(b)(1)(A) and (B) of the HEA provides that a
TEACH Grant recipient must serve as a full-time teacher for a total of
not less than four academic years within eight years after completing
the course of study for which he or she received a TEACH Grant in an
elementary or secondary school that serves low-income students.
    Proposed Regulations: Proposed Sec.  686.2 would provide a
definition of elementary school for TEACH Grant purposes. The term
elementary school would be defined as a nonprofit institutional day or
residential school, including a public elementary charter school, which
provides elementary education, as determined under State law.
    Reason: This proposed definition, which would implement the
statutory requirement that a TEACH Grant recipient teach in an
elementary or secondary school, is from section 9101(18) of the
Elementary and Secondary Education Act of 1965 (ESEA).

High-Need Field

    Statute: Section 420N(b)(1)(C) of the HEA provides that a grant
recipient must teach in one of the high-need fields of mathematics,
science, a foreign language, bilingual education, special education, as
a reading specialist or in another field documented as high-need by the
Federal Government, State government, or local educational agency
(LEA), and approved by the Secretary. Section 420N(a)(2)(B)(i)
identifies English language acquisition as a high-need field.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
high-need field for the purposes of the TEACH Grant program. A high-
need field would include bilingual education and English language
acquisition, foreign language, mathematics, reading specialist,
science, special education, and any other field documented as high-need
by the Federal Government, a State government or an LEA, and approved
by the Secretary and listed in the Department's annual Teacher Shortage
Area Nationwide Listing (Nationwide List).
    Reason: This proposed definition would implement the statutory
requirement that, to meet the service obligation, a TEACH Grant
recipient must teach in a high-need field.

Highly-Qualified

    Statute: Section 420N(b)(1)(E) of the HEA provides that a TEACH
Grant recipient must comply with the requirements for being a highly-
qualified teacher, as defined in section 9101 of the ESEA.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
highly-qualified for purposes of the TEACH Grant program. The term
would have the meaning set forth in section 9101(23) of the ESEA or in
section 602(10) of the Individuals with Disabilities Education Act
(IDEA).
    Reason: This proposed definition would implement the statutory
requirement that a TEACH Grant recipient serve as a highly-qualified
teacher. The Secretary considers it appropriate to use the definition
of highly-qualified from the ESEA for teachers in all of the high-need
fields listed in the HEA with the exception of special education
teachers. Special education teachers must satisfy the definition of
highly-qualified in section 602(10) of the IDEA.

Numeric Equivalent

    Statute: Section 420N(a)(2)(A)(ii)(I) of the HEA provides that a
student may be eligible for a TEACH Grant based, in part, on a grade
point average (GPA) comparable to a 3.25 average on a 4.0 scale under
standards prescribed by the Secretary.
    Proposed regulations: Under proposed Sec.  686.11(a)(1)(v), a
student may be eligible for a TEACH Grant based on a cumulative GPA at
an institution (or, in the case of a first year student, at a secondary
school) of at least 3.25 on a 4.0 scale, or the numeric equivalent. We
are proposing to define the term numeric equivalent, for purposes of
the TEACH Grant program, in a manner consistent with the definition of
that term in 34 CFR 691.15(g) of the Academic Competitiveness Grant
(ACG) program and National Science and Mathematics Access to Retain
Talent (SMART) Grant program regulations.
    As in the ACG and National SMART Grant programs, to determine a
numeric equivalent, an institution that has one or more academic
programs that measure academic performance using alternatives to
standard numeric grading procedures would be required to develop and
apply an academically defensible equivalency policy with a numeric
scale for purposes of determining student eligibility. That equivalency
policy would need to be in writing and available to students upon
request. The policy would also need to include clear differentiations
of student performance to support a determination that a student has
performed, in his or her TEACH Grant-eligible program, at a level
commensurate with at least a 3.25 GPA on a 4.0 scale. Generally, a
grading policy that includes only "satisfactory/unsatisfactory",
"pass/fail", or other similar nonnumeric assessments would not be a
numeric equivalent under the proposed regulations. However, such
assessments would be considered numeric equivalents if the institution
could demonstrate that the "pass" or "satisfactory" standard has
the numeric equivalent of at least a 3.25 GPA on a 4.0 scale, or that a
student's performance for tests and assignments yielded a numeric
equivalent of a 3.25 GPA on a 4.0 scale. Under the proposed definition
of the term numeric equivalent, the institution's equivalency policies
would need to be consistent with any other standards that the
institution may have developed for academic and other Title IV, HEA
program purposes, such as graduate school applications and scholarship
eligibility, to the extent such standards distinguish among various
levels of a student's academic performance.
    Reason: During negotiated rulemaking, the non-Federal negotiators
requested clarification of the term "numeric equivalent" as it is
used to determine comparability to a 3.25 GPA on a 4.0 scale. We agreed
to incorporate the definition of the term as it is used in the ACG and
National SMART Grant programs. The ACG and National SMART Grant
programs have GPA requirements that are similar to those of TEACH
Grants in that students are required to maintain minimum GPAs to retain
eligibility for a TEACH Grant. The Department has had a successful
experience implementing the ACG/National SMART Grant programs'
definition of "numeric equivalent," and thus believes that this
definition should be applied to GPA calculations for the TEACH Grant
program. In addition, maintaining a consistent definition between
programs minimizes burden for institutions and provides a consistent
standard between programs.

Post-Baccalaureate Program

    Statute: Section 420L(2) of the HEA defines post-baccalaureate as a
program of instruction for teacher candidates who have completed a
baccalaureate degree, that does not lead to a graduate degree, and that
consists of courses required by a State in order for a teacher
candidate to receive a professional certification or licensing
credential that

[[Page 15340]]

is required for employment as a teacher in an elementary school or
secondary school in that State, but does not include any program of
instruction offered by a TEACH Grant-eligible institution that offers a
baccalaureate degree in education.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
post-baccalaureate program for purposes of the TEACH Grant program
using the statutory language and stating that a post-baccalaureate
program would be treated as an undergraduate program for TEACH Grant
purposes.
    Reason: This proposed definition is necessary to implement the HEA
and to clarify that the Secretary considers a post-baccalaureate
program to be an undergraduate program for TEACH Grant purposes.

Retiree

    Statute: Section 420N(2)(B)(i) of the HEA provides that a retiree
from another occupation with expertise in a field in which there is a
shortage of teachers who is pursuing a master's degree to prepare to
teach would be eligible for a TEACH Grant.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
retiree, for purposes of the TEACH Grant program, as an individual who
has decided to change his or her occupation for any reason and who has
expertise, as determined by the institution, in a high-need field.
    Reason: This proposed definition would implement the statutory
provision specifying that individuals who are seeking a master's degree
and are retirees from another occupation with expertise in a field in
which there is a shortage of teachers may be eligible for a TEACH
Grant.

School Serving Low-Income Students (Low-Income School)

    Statute: Section 420N(b)(1)(B) of the HEA provides that a TEACH
Grant recipient must agree to teach in a school described in section
465(a)(2)(A) of the HEA.
    Proposed Regulations: Proposed Sec.  686.2 would define a school
serving low-income students (low-income school), for purposes of the
TEACH Grant program, as an elementary or secondary school that is in
the school district of an LEA that is eligible for assistance pursuant
to Title I of the ESEA; that has been determined by the Secretary to be
a school in which more than 30 percent of the school's total enrollment
is made up of children who qualify for services provided under Title I
of the ESEA; and that is listed in the Department's Annual Directory of
Designated Low-Income Schools for Teacher Cancellation Benefits. The
Secretary would consider all elementary and secondary schools operated
by the Bureau of Indian Education (BIE) or operated on Indian
reservations by Indian tribal groups under contract or grant with the
BIE to qualify as schools serving low-income students.
    Reason: The proposed definition is drawn from section 465(a)(2)(A)
of the HEA, which provides for loan cancellation for teachers in the
Federal Perkins Loan Program. The non-Federal negotiators questioned
whether the designation of a low-income school would be made by the
school district or by the individual school. As is clearly specified in
section 465(a)(2)(A) of the HEA, the designation of a low-income school
is made at the level of the individual school.

Secondary School

    Statute: Section 420N(b)(1)(A) and (B) of the HEA provides that a
TEACH Grant recipient must serve as a full-time teacher in an
elementary or secondary school that serves low-income students for a
total of not less than four academic years within eight years after
completing the course of study for which he or she received a TEACH
Grant.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
secondary school, for TEACH Grant purposes, as a secondary school would
be a nonprofit institutional day or residential school, including a
public secondary charter school, that provides secondary education, as
determined under State law, but does not include any education beyond
grade 12.
    Reason: This proposed definition, which is taken from section
9101(38) of the ESEA, would implement the statutory requirement that a
TEACH Grant recipient teach in an elementary or secondary school.

Service Agreement

    Statute: Section 420N(b) of the HEA provides that each applicant
for a TEACH Grant must sign an agreement to serve as a full-time
teacher in a low-income school in a high-need field for a total of not
less than four academic years within eight years after completing the
course of study for which the individual received a TEACH Grant, submit
evidence of such employment in the form of a certification by the chief
administrative officer of the school upon completion of each year of
service, and comply with the requirements for being a highly-qualified
teacher.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
service agreement, for purposes of the TEACH Grant program, as an
agreement under which the individual receiving a TEACH Grant commits to
meet the service obligation described in Sec.  686.12 and to comply
with the notification requirements and other provisions of the
agreement.
    Reason: This proposed definition would implement the statutory
requirement that a service agreement accompany each TEACH Grant
application.

TEACH Grant-Eligible Institution

    Statute: Section 420L(1) and (2) of the HEA provides that an
eligible institution for purposes of the TEACH Grant program is an
institution of higher education as defined in section 102 of the HEA
that is financially responsible and that provides: High-quality teacher
preparation and professional development services, including extensive
clinical experience as part of pre-service preparation; pedagogical
coursework, or assistance in the provision of such coursework; and
supervision and support services to teachers, or assistance in the
provision of such services, or that provides a post-baccalaureate
program of instruction.
    Proposed Regulations: The proposed definition of TEACH Grant-
eligible institution in Sec.  686.2 would implement the statutory
requirement that an institution must be financially responsible by
using the current standards for institutions participating in the Title
IV HEA programs in 34 CFR part 668, subpart L. Under the proposed
definition, an institution must meet this financial responsibility
requirement and provide a high-quality teacher preparation program at
the baccalaureate or master's degree level that is (1) accredited by a
specialized accrediting agency recognized by the Secretary for the
accreditation of professional teacher education programs; or (2)
approved by a State, includes extensive pre-service clinical
experience, and provides pedagogical coursework, or the assistance in
the provision of such coursework. In both cases, the institution must
provide supervision and support services to teachers or assist in the
provision of services to teachers.
    Under the proposed definition of TEACH Grant-eligible institution,
an institution that is financially responsible would also be eligible
to participate in the TEACH Grant program under any of the following
conditions:
    (A) The institution offers a post-baccalaureate program but not a

[[Page 15341]]

baccalaureate teacher preparation program.
    (B) The institution offers a baccalaureate degree that, in
combination with other training or experience, will prepare an
individual to teach in a high-need field and has entered into an
agreement with a TEACH Grant-eligible institution that offers a teacher
preparation program or one that offers a post-baccalaureate program.
    (C) The institution provides either a two-year program that is
acceptable for full credit toward a high-quality baccalaureate teacher
preparation program at a TEACH Grant-eligible institution, as
demonstrated by the institutions, or a two-year program that is
acceptable for full credit toward a baccalaureate degree in a high-need
field at a TEACH Grant-eligible institution, as demonstrated by the
institutions.
    Reasons: For TEACH Grant purposes, section 420L of the HEA
specifies that an eligible institution must be financially responsible.
Unlike the current regulations that allow an institution that is not
financially responsible to continue to participate in all of the other
title IV, HEA programs under an alternate financial standard in Sec.
668.175, the proposed regulations would not permit that institution to
participate in the TEACH Grant program under alternate standards in
Sec.  668.175(d)(1)(ii), (f), or (g).
    The proposed definition of TEACH Grant-eligible institution would
make several kinds of institutions TEACH Grant-eligible. In some cases
eligibility would be based on an institution's offering a teacher
preparation program. In other cases, eligibility would be based on the
relationships institutions establish with one another. This would
provide for several pathways for students to acquire the education and
knowledge needed to serve as highly-qualified teachers in high-need
fields. One such pathway would be completion of a baccalaureate or
master's degree teacher preparation program. The Department initially
considered requiring that the teacher preparation program offered by an
institution be accredited by a specialized accrediting agency
recognized by the Secretary for the accreditation of teacher education
programs or be approved by a State. However, because section 420L(1)(A)
of the HEA stipulates that teacher preparation must include extensive
clinical experience, and some States approve programs that do not
include extensive clinical experience, the Department proposes instead
that a teacher preparation program must either be accredited by a
specialized accrediting agency or approved by a State and include
extensive pre-service clinical experience and pedagogical coursework.
    The proposed definition of TEACH Grant-eligible program would
clarify that, in order to be eligible under this program, an
institution offering a teacher preparation program must also provide
supervision and support services to teachers, or assist in the
provision of services to teachers. Several non-Federal negotiators
noted that most institutions do not directly supervise teachers in the
classroom, if the term "supervise" is understood in the employment
sense. However, institutions do provide services in the form of
providing information and resources to teachers and school districts,
and direct observation and coaching, to strengthen the classroom
performance of novice teachers. The definition of TEACH Grant-eligible
program includes examples of the kinds of services that an institution
might offer as its supervision and support services.
    A second pathway for a student to prepare to teach in a high-need
field would be either completion of a baccalaureate program at one
institution and a master's level teacher preparation program at another
institution or a post-baccalaureate program at an institution that does
not offer a teacher preparation program. Under the proposed definition,
in order for the first institution to be eligible, it would need to
have entered into an agreement with an institution offering a teacher
preparation program or a post-baccalaureate program.
    Two pathways are identified for students who initially enroll in a
two-year institution. The Department initially considered making such
an institution eligible if it offered a program that was fully
transferable to a four-year TEACH Grant-eligible institution offering a
teacher preparation program or one offering a baccalaureate program in
a high-need field. The non-Federal negotiators recommended using the
phrase "acceptable for full credit toward a baccalaureate degree" in
place of "fully transferable to a four-year institution." We used the
language recommended by the non-Federal negotiators in the proposed
definition because it would mirror language from section 101 of the
HEA. We would consider that an institution meets this requirement if it
can demonstrate upon the request of the Secretary that its two-year
program is fully-acceptable by at least one four-year institution.
Examples of documents institutions might use to demonstrate that the
two-year program is acceptable for full credit toward a baccalaureate
program would include both formal articulation agreements with four-
year institutions and actual student records demonstrating that four-
year institutions fully accept transfer credits from the two-year
institution.

TEACH Grant-Eligible Program

    Statute: The HEA does not define the term eligible program for the
TEACH Grant program.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
TEACH Grant-eligible program as an eligible program as defined in 34
CFR 668.8 that is a program of study that prepares an individual to
teach in a high-need field and that leads to a baccalaureate or
master's degree, or is a post-baccalaureate program of study. Under the
proposed definition for the term TEACH Grant-eligible program, a two-
year program of study that is acceptable for full credit toward a
baccalaureate degree would be considered to be a program of study that
leads to a baccalaureate degree.
    Reasons: The proposed definition is based on provisions in section
420L of the HEA and the proposed definition of TEACH Grant-eligible
institution in proposed Sec.  686.2. While supporting the definition,
some non-Federal negotiators were concerned that it would not be
readily apparent to students which programs at an institution would be
TEACH Grant-eligible programs because of the various pathways that a
student might follow in preparing to teach as a highly-qualified
teacher in a high-need field. The Department believes that each
institution would need to define which of its programs would be TEACH
Grant-eligible programs. A couple of the non-Federal negotiators
suggested that their institutions would likely require students to
develop an academic plan indicating how they would gain the education
needed to begin a teaching career as a highly-qualified teacher in a
high-need field. Based on that plan, they would be able to determine
whether the student's program of study meets the definition
requirements of a TEACH Grant-eligible program. Other non-Federal
negotiators agreed and suggested that it would be helpful to include
the appropriate academic departments in the review of academic plans.
All members of the negotiating committee agreed that these suggestions
made sense.

Teacher

    Statute: The HEA does not define the term teacher.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
teacher

[[Page 15342]]

for purposes of the TEACH Grant program as a person who provides direct
classroom teaching or classroom-type teaching in a non-classroom
setting, including special education teachers and reading specialists.
    Reason: The proposed definition of teacher in Sec.  686.2 is taken
from the FFEL program regulations for teacher loan forgiveness in 34
CFR 682.215. The Secretary believes that it would be appropriate to use
the same definition for both the TEACH Grant program and the FFEL
teacher loan forgiveness program. Under the proposed definition, the
term would not include counselors, administrators or other types of
school personnel who may be listed in the Department's annual Teacher
Shortage Area Nationwide Listing but who do not provide classroom or
classroom-type teaching.

Teacher Preparation Program

    Statute: Section 420L of the HEA refers to teacher preparation
program in the context of an eligible institution.
    Proposed Regulations: Proposed Sec.  686.2 would define the term
teacher preparation program, for TEACH Grant program purposes, as a
State-approved course of study, the completion of which signifies that
a student has met all the State's educational or training requirements
for initial certification or licensure to teach in the State's
elementary or secondary schools. Under this definition, a teacher
preparation program could be a regular program or an alternative route
to certification, as defined by the State. Under the proposed
definition, the teacher preparation program must be provided by an
institution of higher education.
    Reason: The proposed definition of teacher preparation program
would be adopted from the Reporting Reference and User Manual, the
accountability system mandated under Title II (sections 207 and 208) of
the HEA. The manual, which was subject to public comment, has been in
use since 2000. Using the same definition in the TEACH Grant program
would ensure consistency across programs that focus on enhancing
teacher quality.

Duration of Student Eligibility (Sec.  686.3)

    Statute: Section 420M(d)(1) and (2) of the HEA provides that the
maximum amount an undergraduate or post-baccalaureate student may
receive in TEACH Grants is $16,000 and that the maximum amount a
graduate student may receive in TEACH Grants is $8,000.
    Proposed Regulations: Section 686.3 of the proposed regulations
would implement the statutory maximums. An undergraduate or post-
baccalaureate student would be eligible to receive the equivalent of up
to four Scheduled Awards during the period required for the completion
of the first undergraduate TEACH Grant-eligible baccalaureate program
of study and the first post-baccalaureate program of study combined. A
graduate student would be eligible to receive the equivalent of up to
two Scheduled Awards during the period required for the completion of a
TEACH Grant-eligible master's degree program of study.
    Reason: The proposed regulations would implement the statutory
requirements related to the duration of student eligibility from
section 420M(d)(1) and (2) of the HEA.

Institutional Participation (Sec.  686.4)

    Statute: The HEA does not specify whether an institution is
required to participate in the TEACH Grant program.
    Proposed Regulations: Section 686.4 of the proposed regulations
would provide that a TEACH Grant-eligible institution that offers one
or more TEACH Grant-eligible programs may elect to participate in the
TEACH Grant program. If an institution begins participation in the
TEACH Grant program during an award year, a student enrolled at and
attending that institution would be eligible to receive a TEACH grant
for the payment period during which the institution begins
participation and any subsequent payment period.
    An institution may cease to participate in the TEACH Grant program
or may become ineligible to participate in the TEACH Grant program
during an award year. A student who was attending the institution and
who submitted a SAR with an official EFC to the institution, or for
whom the institution obtained an ISIR with an official EFC, before the
date the institution became ineligible would still be eligible to
receive a TEACH Grant for the award year. The student would be eligible
for the payment periods that the student completed before the
institution ceased participation or became ineligible to participate
and the payment period in which the institution ceased participation or
became ineligible to participate.
    An institution that ceases to participate in the TEACH Grant
program or becomes ineligible to participate in the TEACH Grant program
would be required to provide to the Secretary, within 45 days after the
effective date of the loss of eligibility: (1) The name and other
student identifiers of each eligible student under Sec.  686.11 who,
during the award year, submitted a SAR with an official EFC to the
institution or for whom it obtained an ISIR with an official EFC before
it ceased to participate in the TEACH Grant program or became
ineligible to participate; (2) the amount of TEACH Grant funds paid to
each student during the award year; (3) the amount due each student
eligible to receive a TEACH Grant through the end of the payment period
during which the institution ceased to participate in the TEACH Grant
program or became ineligible to participate; and (4) an accounting of
the TEACH Grant program expenditures for that award year to the date of
termination.
    Reasons: The proposed regulations for this section would generally
follow the Federal Pell Grant Program regulations in 34 CFR 690.7.
Using these established procedures and processes that are already
understood by institutions would simplify delivery for institutions and
reduce institutional burden.

Enrollment Status for Students Taking Regular and Correspondence
Courses (Sec.  686.5)

    Statute: The HEA does not specifically address enrollment status
for regular and correspondence courses.
    Proposed Regulations: Section 686.5 of the proposed regulations
would specify how an institution would treat correspondence courses for
purposes of the TEACH Grant program. In determining a student's
enrollment status, an institution could include correspondence courses
a student takes from either his or her own institution or from another
institution having an arrangement for this purpose with the student's
institution.
    Except as specified in proposed Sec.  686.5(c), the correspondence
work that could be included in determining a student's enrollment
status would be that amount of work that: (a) Applies toward a
student's degree or post-baccalaureate program of study or is remedial
work taken by the student to help in his or her TEACH Grant-eligible
program; (b) is completed within the period of time required for
regular coursework; and (c) does not exceed the amount of a student's
regular coursework for the payment period for which enrollment status
is being calculated.
    Under proposed Sec.  686.5(c), a student who would be a half-time
student based solely on his or her correspondence work would be
considered a half-time student unless the calculation in the preceding
paragraph produces an enrollment status greater than half-time. A
student who would be a less-than-half-time student based solely on his
or

[[Page 15343]]

her correspondence work or a combination of correspondence work and
regular coursework would be considered a less-than-half-time student.
    Reason: As is the case with the Federal Pell Grant Program, a
student's award for a TEACH Grant is considered to be awarded based on
the student's enrollment status. Accordingly, we believe it is
appropriate for proposed Sec.  686.5 to follow the corresponding
Federal Pell Grant Program regulations in 34 CFR 690.8 for determining
enrollment status for students taking correspondence courses.

Payment From More Than One Institution (Sec.  686.6)

    Statute: The HEA does not address the issue of receipt of TEACH
Grants from more than one institution.
    Proposed Regulations: Proposed Sec.  686.6 would stipulate that a
student may not receive TEACH Grant payments concurrently from more
than one institution.
    Reason: Under the Federal Pell Grant program and the ACG and
National SMART Grant programs, a student cannot receive payments from
more than one institution at the same time. To ensure coordination with
the Federal Pell Grant program and the ACG and National SMART Grant
programs programs, proposed Sec.  686.6 would provide that a student
can only receive a TEACH Grant from one institution for the same
payment period.

Application (Sec.  686.10)

    Statute: Section 420N(a) of the HEA contains the student
eligibility requirements for the TEACH Grant program. Section
420N(a)(1) requires that to receive a TEACH Grant, a student must
apply. Section 420N(a)(2) provides for additional information that a
student may need to submit as part of the application process. Section
420N(b) provides that a service agreement must accompany the
application. In addition, the TEACH Grant program, along with the other
Title IV, HEA programs, is subject to the provisions of section 483 of
the HEA, which establishes a common financial aid form for these
programs.
    Proposed Regulations: Section 686.10 of the proposed regulations
would specify the procedures that a student must follow when applying
for a TEACH Grant, and in particular, would require that a student must
submit a Free Application for Federal Student Aid (FAFSA); complete and
sign a service agreement and promise to repay; and provide any
additional information requested by the Secretary.
    Reasons: Under section 483(a) of the HEA, the FAFSA is the standard
form used by all students applying for Title IV, HEA program aid.
Although the TEACH Grant program is not need-based, using the FAFSA and
procedures that are similar to those used in the Federal Pell Grant
program would enable institutions to make a determination of student
eligibility for the TEACH Grant program until a streamlined application
can be developed. Completion of a service agreement and promise to
repay are considered to be part of the application process. Further
requirements regarding the service agreement would be set forth in
proposed Sec.  686.12. The promise to repay describes the terms and
conditions of the Federal Direct Unsubsidized Loan to which the TEACH
Grant is converted if the grant recipient fails to meet the service
obligation. Finally, the regulations provide for the collection of
additional information, such as test scores, to ensure that students
are eligible.

Eligibility to Receive a Grant (Sec.  686.11)

Undergraduate, Post-Baccalaureate, and Graduate Students

    Statute: Section 420N(a) of the HEA provides student eligibility
requirements for the TEACH Grant program.
    Proposed Regulations: Section 686.11(a)(1)(i) through (iv) of these
proposed regulations would set forth the TEACH Grant student
eligibility requirements common to all students who are enrolled in
undergraduate, post-baccalaureate, and graduate programs. All students
would have to meet the student eligibility requirements under 34 CFR
part 668, subpart C; have submitted a completed application along with
a signed service agreement; and be enrolled in a TEACH Grant-eligible
institution in a TEACH Grant-eligible program. All students would also
be required to be completing coursework and other requirements
necessary to begin a career in teaching or plan to do so before
graduating.
    Reason: An otherwise eligible student remains eligible for a TEACH
Grant as long as that student is still completing coursework and other
requirements necessary to begin a career in teaching or plans to
complete such coursework and requirements prior to graduating. However,
simply graduating from a program does not necessarily mean the same as
completing all of the coursework necessary to begin a career in
teaching. For example, a student may graduate with an undergraduate
degree, but must complete a post-baccalaureate program or other
coursework before the student can begin a career in teaching. Thus,
where the proposed regulations refer to completion of coursework and
other requirements before graduating, the Secretary would interpret the
term "graduating" to mean the point at which the student has
completed all the coursework and other requirements necessary to
prepare that student to begin a career in teaching.
    Statute: Section 420N(a) of the HEA provides student eligibility
requirements for the TEACH Grant program. Section 420N(a)(2)(A)(ii) of
the HEA contains requirements related to academic achievement that
enrolled students receiving TEACH Grants must meet.
    Proposed Regulations: Section 686.11(a)(1)(v) of the proposed
regulations would set forth additional TEACH Grant student eligibility
requirements. Proposed Sec.  686.11(a)(1)(v)(E) would stipulate that
all students, regardless of postsecondary level, may qualify for a
TEACH Grant by scoring above the 75th percentile of scores on at least
one of the batteries from a nationally-normed standardized
undergraduate, graduate, or post-baccalaureate admissions test. The
student's test score would be compared to the test score achieved by
all students taking the same test during the same period the student
took the test. Students who do not meet this requirement must meet the
GPA requirements under proposed Sec.  686.11(a)(1)(v)(A) through (D) to
either initially qualify for or maintain eligibility for a TEACH Grant.
    Reason: Proposed Sec.  686.11(a)(1)(v)(E) would implement the
statutory requirement under section 420N(a)(2)(A)(ii)(II) of the HEA
that a student may qualify for a TEACH Grant by displaying high
academic aptitude as demonstrated by scoring above the 75th percentile
on at least one battery on a standardized admissions test. Thus, for
example, a student who scored above the 75th percentile on the math
section of the SAT Reasoning Test (SAT), but who scored below the 75th
percentile on the other sections of the SAT, could qualify for a TEACH
Grant, if otherwise eligible, because the student displayed high
academic aptitude by scoring above the 75th percentile on one of the
SAT batteries.
    The proposed regulations would not restrict the applicability of
qualifying test scores by educational level. A qualifying test score
from an undergraduate admissions test could qualify an otherwise
eligible student for a TEACH Grant regardless of whether the student
would be an undergraduate

[[Page 15344]]

or graduate student. The proposed regulations would also not place a
limit on the period of time that has elapsed since the student earned
the qualifying test score. The qualifying test score is intended to
demonstrate high academic aptitude and the negotiators believed that
there is no reason to suppose that there would be a time limitation on
such demonstration of academic aptitude or that one should be set. An
otherwise eligible student who qualified with a test score would not
need to meet additional GPA requirements to retain eligibility for a
TEACH Grant. However, tests used exclusively as placement tests by the
institution could not be used to qualify a student for a TEACH Grant.
    Proposed Sec.  686.11(a)(1)(v)(A)(1) would implement the statutory
provision that a student in the first year of a program of
undergraduate education can qualify for a TEACH Grant with a cumulative
secondary school GPA of 3.25 on a 4.0 scale, or the numeric equivalent.
A student qualifying with such a GPA for the first year would need to
meet additional GPA requirements to retain eligibility for a TEACH
Grant once that student is beyond the first year of his or her
undergraduate program.
    Proposed Sec.  686.11(a)(1)(v)(A)(2), (B), (C), and (D) would
implement the statutory requirement that a student who did not achieve
the requisite test score under proposed Sec.  686.11(a)(1)(v)(E) must
maintain a 3.25 GPA on a 4.0 scale, or the numeric equivalent, in order
to maintain eligibility for a TEACH Grant. Under proposed Sec.
686.11(a)(1)(v)(A)(2), students in the first year of a program of
undergraduate education, as determined by the institution, who did not
qualify under proposed Sec.  686.11(a)(1)(v)(A)(1), would need to
achieve an undergraduate GPA of 3.25 on a 4.0 scale, or the numeric
equivalent, through the most recently completed payment period, to be
eligible for a TEACH Grant. Similarly, under proposed Sec.
686.11(a)(1)(v)(B), a student beyond the first year of a program of
undergraduate education (including a post-baccalaureate program), as
determined by the institution, would need to maintain an undergraduate
GPA of 3.25 on a 4.0 scale, or the numeric equivalent, through the
most-recently completed payment period, to continue to be eligible.
    For graduate students, proposed Sec.  686.11(a)(1)(v)(C) would
provide that the student may qualify for a TEACH Grant in the first
payment period of graduate study based on a cumulative undergraduate
GPA of at least 3.25 on a 4.0 scale, or the numeric equivalent. Under
proposed Sec.  686.11(a)(1)(v)(D), graduate students beyond the first
payment period would need to achieve a cumulative graduate GPA of at
least 3.25 on a 4.0 scale, or the numeric equivalent, through the most-
recently completed payment period.

Current or Former Teachers or Retirees (Sec.  686.11(b))

    Statute: Section 420N(a) of the HEA provides student eligibility
requirements for the TEACH Grant program. Section 420N(a)(2)(B)
provides student eligibility requirements for students who are current
or former teachers or retirees.
    Proposed Regulations: Proposed Sec.  686.11(b) would set forth the
TEACH Grant student eligibility requirements for current or former
teachers and retirees. A current or former teacher or retiree would
need to meet the student eligibility requirements under 34 CFR part
668, subpart C and have submitted a completed application along with a
signed service agreement, and be applying for a TEACH Grant to obtain a
master's degree. The applicant would need to be a teacher or retiree or
be a current or former teacher pursuing certification through a high-
quality alternative certification route. The applicant also would need
to be enrolled in a TEACH Grant-eligible institution in a TEACH Grant-
eligible program during the time period required for completion of a
master's degree.
    Reason: Proposed Sec.  686.11(b) would implement the statutory
requirements related to student eligibility for current and former
teachers and retirees in 420N(a)(2)(B) of the HEA.

Transfer Student GPA (Sec.  686.11(c))

    Statute: Section 420N(a)(2)(A)(ii)(I) of the HEA provides that an
undergraduate, post-baccalaureate or graduate student's eligibility for
a TEACH Grant may be based on the student maintaining a cumulative GPA
of at least 3.25 on a 4.0 scale.
    Proposed Regulations: Proposed Sec.  686.11(c) would be based on
the transfer student GPA requirements in the National SMART Grant
program for institutions that do or do not incorporate transfer grades
from coursework accepted by the new institution, except that for
purposes of the TEACH Grant program, the GPA would be calculated based
on the coursework accepted by the institution on transfer without
determination of whether the transferred coursework will actually be
considered part of the TEACH Grant-eligible program.
    Reasons: The proposed regulations would ensure that a transfer
student could meet the GPA requirement to receive a TEACH Grant for his
or her first payment period at the institution to which the student has
transferred by calculating the student's transfer GPA using a
methodology similar to that already used by the institution to
determine a transfer student's GPA for the National SMART Grant
program. The Secretary believes that allowing the new institution to
use grades assigned to coursework accepted by the new institution for
initial GPA calculation purposes for that transfer student instead of
using grades assigned only to coursework accepted into the TEACH Grant-
eligible program would decrease the burden on institutions and students
because institutions will not have to take the extra step of
determining which of the transferred courses will actually apply to the
TEACH Grant-eligible program at the time of the student's admission.

Service Agreement (Sec.  686.12)

    Statute: Section 420N(b) requires that each application for a TEACH
Grant contain or be accompanied by a service agreement. In accordance
with section 420N(b)(1)(A) through (C) and (E) of the HEA, the service
agreement must state that the TEACH Grant recipient will serve as a
full-time teacher for a total of not less than four academic years
within eight years of completing the course of study for which the
applicant received a TEACH Grant in a low-income school as a highly-
qualified teacher in a high-need field. Under section 420N(b)(1)(D) of
the HEA, the service agreement must require the grant recipient to
submit evidence of his or her service, upon completion of each year of
such service, in the form of a certification by the chief
administrative officer of the school in which the recipient is
teaching. Lastly, section 420N(c) of the HEA provides that if the
recipient fails or refuses to carry out the service obligation, any
TEACH Grants received shall be treated as a Federal Direct Unsubsidized
Loan under part D of Title IV of the HEA, with interest accruing from
the date that each TEACH Grant was disbursed.
    Proposed Regulations: Section 686.12(a) of the proposed regulations
would provide that an applicant may receive a TEACH Grant only after
signing a service agreement and receiving counseling in accordance with
proposed Sec.  686.32.
    Section 686.12(b) of the proposed regulations would describe the
requirements a grant recipient must satisfy in order to fulfill the
service obligation. The grant recipient must--

[[Page 15345]]

     Serve as a full-time teacher for a total of not less than
four elementary or secondary academic years within eight calendar years
after completing the program for which the recipient received the TEACH
Grant or otherwise ceased enrollment;
     Teach in a low-income school;
     Be a highly-qualified teacher;
     Teach in a high-need field in the majority of classes
taught during each elementary or secondary academic year;
     Submit documentation of such service each year certified
by the chief administrative officer of the school in which the grant
recipient teaches; and
     Comply with the terms, conditions, and other requirements
of the proposed regulations in Sec. Sec.  686.40-686.43.
    Section 686.12(c) of the proposed regulations would (1) require the
completion of a service obligation for each program of study for which
the recipient received a TEACH Grant; (2) stipulate that such service
obligation begins following the completion or other cessation of
enrollment in a TEACH Grant-eligible program; and (3) provide that
creditable teaching service may apply to more than one service
obligation. Proposed Sec.  686.12(c) would provide that a grant
recipient may request a suspension of the eight-year time period during
which the service obligation must be completed in accordance with
proposed Sec.  686.41.
    Lastly, proposed Sec.  686.12(d) would provide that a grant
recipient who completes a TEACH Grant-eligible program in a high-need
field listed in the Nationwide List cannot satisfy his or her service
obligation to teach in that high-need field unless the field is listed
in the Nationwide List for the State in which the grant recipient
begins to teach at the time the recipient begins teaching.
    Reasons: The purpose of proposed Sec.  686.12 would be to implement
the statutory requirements regarding the content of the service
agreement and to serve as a source of information about the service
obligations associated with the TEACH Grant program. The service
agreement is a legally-binding document, the terms of which must be met
for a TEACH Grant recipient to satisfy the service obligation. The
service agreement contains information on the terms, conditions and
other requirements in proposed Sec. Sec.  686.40 through 686.43 with
which the grant recipient must comply, such as: how to document the
service obligation; under what conditions a suspension of the eight-
year period for completion of the service obligation may be granted;
under what conditions a service agreement can be discharged; and under
what conditions a TEACH Grant is converted to a Federal Direct
Unsubsidized Loan.
    In recognition of a recent trend to re-structure elementary schools
on a Kindergarten-Eighth Grade model and to promote the math and
science skills of elementary school teachers, one of the non-Federal
negotiators proposed that the Department consider allowing a teacher to
fulfill the requirement to teach in a high-need field if the majority
of classes taught by the grant recipient were in a high-need field.
This non-Federal negotiator believed that adopting such a policy would
allow more elementary school teachers to benefit from the TEACH Grant
program. The Department agreed. We reflect this suggestion in proposed
Sec.  686.12(b)(1)(iii) and also in the proposed regulations on
documenting the service obligation in Sec.  686.40(c)(1)(i) and (ii).
    Section 686.12(c)(1) of the proposed regulations would provide that
creditable teaching service performed by a TEACH Grant recipient may
apply to more than one service obligation. At the request of the non-
Federal negotiators, we are including in this discussion several
examples that illustrate when the application of creditable teaching
service would apply to more than one service obligation. For instance,
if a grant recipient completes a TEACH Grant-eligible program at a
TEACH Grant-eligible institution and immediately enrolls in another
TEACH Grant-eligible program at a TEACH Grant-eligible institution
before beginning a career in teaching, the recipient may request a
suspension of the eight-year time period under proposed Sec.
686.41(a)(1) for the period of enrollment in the subsequent program and
upon completion of the subsequent program, apply all qualified teaching
service to both service obligations.
    Another example would be when a grant recipient completes a TEACH
Grant-eligible program at a TEACH Grant-eligible institution and begins
qualified teaching service to meet the service obligation before
enrolling in a subsequent TEACH Grant-eligible program. In this case,
the recipient may request a suspension of the eight-year time period
associated with the first service obligation under proposed Sec.
686.41(a)(1) for the period of enrollment in a subsequent program and,
upon completion of the subsequent program, apply qualified teaching
service performed after the completion of the subsequent program to
both service obligations. The qualified teaching service performed
before the suspension would count only toward fulfillment of the first
service obligation.
    It is important to note that a TEACH grant recipient who fully
satisfies the service obligation associated with the program for which
TEACH Grants were received and subsequently enrolls in another TEACH
Grant-eligible program cannot apply to the second service obligation
any of the qualified service completed prior to enrolling in the
subsequent program.
    Finally, a grant recipient who has completed a TEACH Grant-eligible
program and who begins qualified full-time teaching service toward the
service obligation associated with that program, and then concurrently
enrolls in another TEACH Grant-eligible program may, upon completing
the subsequent TEACH Grant-eligible program, apply only qualified
teaching service performed after the completion of the subsequent TEACH
Grant-eligible program to both service obligations.
    Because of the importance of the service agreement and because it
is a source of information for the TEACH Grant recipient, several non-
Federal negotiators believed that the agreement was the appropriate
place to include language describing the risk a TEACH Grant recipient
takes when majoring in a high-need field listed in the Nationwide List
with the intent to teach in the high-need field upon completion of his
or her program of study. The Department agreed. Therefore, we are
proposing regulations in Sec.  686.12(d) (Service agreement) stating
that a grant recipient who completes a TEACH Grant-eligible program in
a high-need field listed in the Nationwide List cannot satisfy his or
her service obligation to teach in that high-need field unless the
high-need field in which he or she has prepared to teach continues to
be listed for the State in which the grant recipient begins teaching in
fulfillment of his or her service obligation.

Submission Process and Deadline for a SAR or ISIR (Sec.  686.20)

    Statute: Section 420M provides that the Secretary shall pay a grant
to each TEACH Grant-eligible student who files an application and a
service agreement for attendance in a TEACH Grant-eligible program.
    Proposed Regulations: Proposed Sec.  686.20 would provide that, as
in the Federal Pell Grant program, a student must submit a SAR, or the
institution must receive an ISIR, within established deadlines. The
Federal Pell Grant Program requires that the student's SAR or ISIR be a
valid SAR or valid ISIR with an EFC based on accurate application
information. Unlike the Federal Pell Grant program, proposed Sec.
686.20

[[Page 15346]]

would provide that the SAR or ISIR need only be a record with an
official EFC, i.e., an EFC computed by the Central Processing System
(CPS) of the Department that may or may not be based on verified
application information. Further, the proposed regulations, unlike the
Federal Pell Grant program regulations, would not reference the
deadlines for completing verification of application information under
34 CFR 668.60.
    Reason: Unlike the Federal Pell Grant program, the TEACH Grant
program is not need-based. It would, therefore, not be necessary that
an institution receive a valid SAR or valid ISIR, nor would it be
necessary to subject the TEACH Grant program to the verification
requirements under 34 CFR part 688, subpart E. However, to determine
the amount of a student's TEACH Grant in accordance with Sec.
686.21(c), an institution would need an EFC based on accurate
information even though the EFC is not computed by the CPS.

Calculation of a Grant (Sec.  686.21)

Maximum and Annual Award Amounts

    Statute: Section 420M(a)(1) of the HEA establishes $4,000 as the
amount a TEACH Grant-eligible student may receive for a year, and
section 420M(c)(1) of the HEA provides that awards for part-time
attendance shall be reduced in proportion to a student's less-than-
full-time enrollment status.
    Proposed Regulations: Proposed Sec.  686.21 would provide for a
Scheduled Award of $4,000, the maximum amount a student may receive in
a year, and annual awards of $4,000 for full-time enrollment status,
$3,000 for three-quarter-time enrollment status, $2,000 for half-time
enrollment status, and $1,000 for less-than-half-time enrollment
status.
    Reason: The Secretary proposes to establish the TEACH Grant
Scheduled Award and annual award amounts to implement the statutory
requirements regarding maximum awards and awards for part-time
attendance.

Treatment in Relation to Other Aid Received (Sec.  686.21)

    Statute: Section 420M(c)(2) of the HEA provides that the amount of
a student's TEACH Grant, in combination with Federal and other student
financial assistance the student may receive, may not exceed the
student's cost of attendance.
    Proposed Regulations: Section 686.21(c) of the proposed regulations
would provide that a student's TEACH Grant, when combined with the
student's Federal Pell Grant eligibility and other estimated financial
assistance as defined in 34 CFR 673.5(c), may not exceed the student's
cost of attendance under section 472 of the HEA. Further, proposed
Sec.  686.21(d) would provide that a student's TEACH Grant may replace
the student's EFC. Any amount in excess of the EFC would be considered
estimated financial assistance as defined in 34 CFR 673.5(c).
    Reason: TEACH Grants are not awarded based on need and, therefore,
are permitted to replace a student's EFC toward a student's
postsecondary expenses. As with other forms of aid that may replace
EFC, any TEACH Grant amount in excess of the EFC is considered
estimated financial assistance.

Calculation of a Grant for a Payment Period (Sec. Sec.  686.22 and
686.25)

    Statute: Section 420M(a)(1) of the HEA establishes the amount a
TEACH Grant-eligible student may receive for a year, and section
420M(c)(1) of the HEA provides that awards for part-time attendance
shall be reduced in proportion to a student's less-than-full-time
enrollment status.
    Proposed Regulations: Proposed Sec. Sec.  686.22 and 686.25 would
detail how an institution would calculate a TEACH Grant payment for a
payment period for an eligible student depending on the academic
calendar of the eligible program, the student's enrollment status, and
the amount of the student's annual award.
    Reasons: As is the case with the Federal Pell Grant Program, a
student's award for a TEACH Grant would be based on the student's
enrollment status, a status that is based on attendance over a portion
of an academic year. Proposed Sec. Sec.  686.22 and 686.25 would
generally correspond to the Federal Pell Grant Program regulations in
34 CFR 690.63 and 690.66, including amendments to these sections
published in the Federal Register on November 1, 2007 (72 FR 62014-
62034), for calculating payments for payment periods to distribute a
student's award based on the student's enrollment status.
    As in 34 CFR 690.63(a)(1) and (2) of the Federal Pell Grant Program
regulations, Sec.  686.22(a)(1) and (2) of the proposed regulations
would establish the criteria for programs eligible to use the payment
calculations under proposed Sec.  686.22(b) and (c). For an
undergraduate program including a post-baccalaureate program, Sec.
686.22(a)(1)(i)(C)(1) and (2)(i)(C)(1) of the proposed regulations
would provide that all terms in the award year must have a minimum
full-time enrollment standard of 12 credit hours. In addition, proposed
Sec.  686.22(a)(1)(i)(C)(2) and (2)(i)(C)(2) would provide that, for a
graduate program, all terms in the award year must have the same
minimum full-time enrollment status as determined by the institution
for a semester, trimester, or quarter in that program. The provision
for graduate programs would assure equivalency among all terms in the
award year for purposes of calculating payments for payment periods.

Minimum Payment

    Statute: The statute does not establish a minimum TEACH Grant
payment.
    Proposed Regulations: Section 686.22(g) of the proposed regulations
would provide that the minimum payment for a payment period would be
$25.
    Reason: Because awards must be adjusted not to exceed cost of
attendance, a payment for a payment period may be reduced to a minimal
amount. Setting a small minimum payment for a payment period would not
adversely affect a student's eligibility for an award, and a smaller
payment for a payment period would not be cost effective.

Definition of an Academic Year

    Statute: Section 420M(a)(1) of the HEA establishes the amount a
TEACH Grant-eligible student may receive for a year, and section
420M(c)(1) of the HEA provides that awards for part-time attendance
shall be reduced in proportion to a student's less-than-full-time
enrollment status. In addition, section 481(a)(2) of the HEA defines
the term academic year.
    Proposed Regulations: Section 686.22(h) of the proposed regulations
would require an institution to define the term academic year for
purposes of calculating payments for payment periods under proposed
Sec. Sec.  686.22 and 686.25. For an undergraduate TEACH Grant-eligible
program, including post-baccalaureate programs, the institution would
define the program's Title IV, HEA academic year in terms of credit or
clock hours and weeks of instructional time in accordance with 34 CFR
668.3. For a TEACH Grant-eligible master's degree program, the
institution would need to define the program's Title IV, HEA academic
year in accordance with 34 CFR 668.3, i.e., in terms of weeks of
instructional time, and, for purposes of determining payments for TEACH
Grant awards, in terms of the minimum number of credit or clock hours a
full-time student would be expected to complete in the weeks of
instructional

[[Page 15347]]

time of the program's Title IV, HEA academic year.
    Reasons: Under the proposed regulations, a TEACH Grant-eligible
program's Title IV, HEA academic year based on both weeks of
instructional time and credit or clock hours is integral to determining
the payment formula applicable to the program as well as the
calculation of payments under the appropriate payment formula based on
a student's enrollment status. While a Title IV, HEA academic year for
an undergraduate TEACH Grant-eligible program, including a post-
baccalaureate program, would be defined based on both weeks of
instructional time and credit or clock hours under 34 CFR 668.3, a
Title IV, HEA academic year for a graduate TEACH Grant-eligible
program, such as a master's degree program, would be defined under 34
CFR 668.3 based only on weeks of instructional time. Proposed Sec.
686.22(h)(2) would, therefore, add a credit or clock hour measure to
the Title IV, HEA academic year of a master's degree program for
purposes of calculating a payment for a payment period under proposed
Sec. Sec.  686.22 or 686.25, as applicable, to implement the provisions
of these sections for a TEACH Grant-eligible master's degree program.

Calculation of a Grant for a Payment Period From Two Scheduled Awards
(Sec.  686.22(i))

    Statute: The HEA does not address payments from two Scheduled
Awards.
    Proposed Regulations: Under Sec.  686.22(i) of the proposed
regulations, if a student is completing the remaining portion of a
Scheduled Award in a payment period, the student's payment would be
calculated using the annual award for his or her enrollment status for
the payment period. The student's payment would be the remaining amount
of the Scheduled Award being completed plus an amount from the next
Scheduled Award, if available, up to the total amount of the payment
for the payment period.
    Reason: In certain circumstances, a student may, within the same
payment period, be completing his or her eligibility for the remaining
balance of a Scheduled Award while also having eligibility to receive
another Scheduled Award. This provision would provide guidance to
institutions in calculating a student's payment for the payment period
in this circumstance and would ensure that eligible students receive
their awards.

Calculation of a Grant for a Payment Period That Occurs in Two Award
Years (Sec.  686.23)

    Statute: The HEA does not address a payment period that occurs in
two award years.
    Proposed Regulations: This section would address how an institution
calculates a TEACH Grant payment for an eligible student's payment
period when the student is enrolled in a payment period that overlaps
two award years. These proposed regulations would generally be the same
as the Federal Pell Grant program regulations. As is required in the
Federal Pell Grant, ACG, and National SMART Grant programs, an
institution is required to assign, at its option, a "cross-over"
payment period to one of the two award years. However, it must place a
payment period with more than six months scheduled in an award year
within that award year.
    Reason: A Federal Pell Grant Scheduled Award is available only for
a specific award year. A student's TEACH Grant Scheduled Award would
remain available without respect to award years until the student uses
all of the Scheduled Award, and an eligible student would be able to
receive more than one TEACH Grant in an award year.

Transfer Student: Attendance at More Than One Institution During an
Award Year (Sec.  686.24)

    Statute: The HEA does not address the issue of attendance at more
than one institution during an award year.
    Proposed Regulations: Proposed Sec.  686.24 would specify how an
institution calculates a payment for an eligible student who transfers
from another postsecondary institution within the same award year. The
proposed regulations would be generally similar to the corresponding
provisions in 34 CFR 690.65 under the Federal Pell Grant program
regulations with one exception. Proposed Sec.  686.24(d) would provide
that a student would only receive the remaining balance of the
student's last Scheduled Award if the balance would be less than the
amount of the payment for the payment period calculated under proposed
Sec. Sec.  686.22 or 686.25.
    Reason: To ensure that a student who attends more than one
institution in an award year does not receive an overaward, we are
providing the procedures for an institution to determine the TEACH
Grant payment for a payment period for a transfer student.

Determination of Eligibility for Payment (Sec.  686.31)

    Statute: Section 420M of the HEA provides that the Secretary shall
pay a grant to each TEACH Grant-eligible student who files an
application and a service agreement for attendance in a TEACH Grant-
eligible program and who demonstrates TEACH Grant eligibility under
section 420N of the HEA.
    Proposed regulations: Proposed Sec.  686.31 would provide that,
similar to the Federal Pell Grant, ACG, and National SMART Grant
program regulations, an institution may pay a student a TEACH Grant
only after determining that the student is an eligible student, is
enrolled in a TEACH Grant-eligible program, and has completed the
payment period for which he or she has received a TEACH Grant if
enrolled in a credit-hour program without terms or a clock-hour
program. In addition, the proposed regulations would require an
institution to ensure that the student has signed a service agreement
described in proposed Sec.  686.12 and has completed relevant
counseling requirements prior to paying a student.
    The proposed regulations would mirror similar requirements in the
Federal Pell Grant, ACG, and National SMART Grant program regulations
concerning determinations that a student is not maintaining
satisfactory academic progress or the necessary GPA for a TEACH Grant
or is not pursuing a career in teaching. In addition, similar to the
ACG and National SMART Grant program regulations, the proposed
regulations would allow an institution to make one disbursement for a
payment period to an otherwise eligible student if the student's final
high school GPA is not yet available or if the student's cumulative GPA
through the prior payment period is not yet available and the
institution assumes the liability for any overpayment if the student
fails to meet the required GPA to receive that disbursement.
    Reasons: The Secretary believes that it is important to ensure that
the student has completed the relevant counseling requirements and has
signed the service agreement prior to receiving a TEACH Grant. In
addition, as with the case of the Federal Pell Grant, ACG, and National
SMART Grant programs, the proposed regulations would specify how to
handle situations in which the student is not maintaining satisfactory
progress or the required GPA or is not pursuing a career in teaching
and allow institutions flexibility to make one disbursement for a
payment period when the relevant GPA for a student is

[[Page 15348]]

not yet available. The proposed regulations for this section would
follow the corresponding Federal Pell Grant, ACG, and National SMART
Grant program regulations in 34 CFR 690.75 and 691.75.

Counseling Requirements (Sec.  686.32)

    Statute: The HEA does not address student counseling issues related
to the TEACH Grant program.
    Proposed Regulations: Proposed Sec.  686.32 would require
institutions to ensure that each TEACH Grant recipient receives
counseling prior to each grant disbursement as well as prior to leaving
the institution. Counseling requirements are broken into three
sections: Initial counseling, Subsequent counseling, and Exit
counseling.
    Institutions would be required to provide initial counseling in
person, by audiovisual presentation, or by interactive electronic
means, prior to the first disbursement of a TEACH Grant. Additionally,
schools would be required to ensure that an individual with expertise
in Title IV, HEA programs is available to students shortly after the
initial counseling session to answer questions. Initial counseling
would include information about: The terms and conditions of a TEACH
Grant service agreement; how to access information about low-income
schools and documented high-need fields; the opportunity to request a
service obligation suspension; conditions that could preclude the
student from completing the service obligation attached to a TEACH
Grant; conversion of a grant to a Federal Direct Unsubsidized Loan; and
the rights and responsibilities that apply to any grant recipient whose
TEACH Grant converts to a loan. Initial counseling would also notify
students that in order to receive credit for teaching service the field
in which they teach must be a high-need field at that time and in the
State where the recipient begins teaching that subject.
    If a student receives more than one TEACH Grant, he or she would be
required to complete subsequent counseling prior to any additional
grant disbursements. Similar to initial counseling, institutions would
be able to provide counseling for subsequent disbursements in person,
by audiovisual presentation, or by interactive electronic means and
would be required to have an expert in Title IV, HEA programs available
to answer questions shortly after counseling occurs. Subsequent
counseling would coincide with the student's renewal of the annual
service agreement. The information that would be provided by subsequent
counseling would not be as comprehensive as the information required in
initial counseling. Students would be reminded of: The terms and
conditions of a TEACH Grant service agreement; the consequences of not
completing the service obligation; and the responsibility to repay any
grant amount, plus interest, that is converted to a loan.
    Institutions would also be required to ensure that TEACH Grant
recipients receive exit counseling prior to leaving the institution.
Counseling would be required to be provided in person, by audiovisual
presentation, or by interactive electronic means and institutions would
need to ensure that an expert in Title IV, HEA programs is available
shortly after the exit counseling to answer any questions. If a student
withdraws from the institution without an institution's knowledge or is
no longer enrolled in a TEACH Grant-eligible program and fails to
complete exit counseling, the institution is required to provide exit
counseling within 30 days after the date that the institution learned
that the student withdrew or that the student is no longer enrolled in
a TEACH Grant-eligible program.
    The information provided to students during exit counseling would
be similar to the information that students receive during initial and
subsequent counseling. However, exit counseling would also remind
students that they must teach as a highly-qualified teacher in a high-
need field at a low-income school in order to fulfill the service
obligation of the TEACH Grant. In addition, students would be reminded
that they are required to submit written documentation to the Secretary
on an annual basis showing that they are fulfilling their service
obligation by teaching in a high-need field at a low-income school or
that they intend to complete the service obligation within eight years
of completing their TEACH Grant program. Furthermore exit counseling
would provide TEACH Grant recipients with information about available
repayment options for grants that convert to a loan as well as
information about loan deferments, discharges, default, how to view
student aid information in the National Student Loan Data System
(NSLDS), and how to contact the Secretary.
    Reasons: Sharing information with students about the TEACH Grant
program and the obligations that acceptance of a TEACH Grant entails is
essential. The non-Federal negotiators stressed the need to disclose as
much information as possible to students in a clear and concise manner
on an on-going basis. In addition to sending quarterly interest
statements to students and requiring that recipients complete an annual
service agreement to re-affirm their consent, the Department proposed
annual in-person counseling sessions prior to grant disbursements. The
non-Federal negotiators agreed that counseling students is important;
however, some negotiators argued that requiring institutions to perform
in-person counseling with each TEACH Grant recipient prior to each
grant disbursement would not only be burdensome, but could also delay
disbursements. Additionally, many non-Federal negotiators argued that
there is little proof that in-person counseling is more effective than
interactive electronic counseling and cited several personal accounts
where students who participated in in-person, group counseling sessions
did not pay attention to the presenter. In response to these concerns,
the Department proposed revised language that would allow institutions
to provide counseling in-person, by audiovisual presentation, or by
interactive electronic means with the stipulation that institutions
must ensure that an expert on Title IV, HEA programs is available
shortly after the counseling session to answer any questions.
    The non-Federal negotiators raised another concern about the amount
of counseling that the TEACH Grant program requires. Some argued that
requiring counseling annually is too much and goes above and beyond
what is necessary. Others noted that annual counseling is acceptable,
but only if the counseling could be completed electronically. In
response to these concerns, the Department clarified the proposed
regulations and added language to indicate that subsequent counseling
could be provided in an interactive electronic format or as an
audiovisual presentation.
    Additionally, one negotiator recommended that the Department
consider creating an online interactive counseling program that would
be completed when the student completes the annual service agreement.
The Department intends to create an interactive electronic counseling
program that will be connected to the annual renewal of the service
agreement, though this program will not be available in the first year
of the TEACH Grant program. Institutions would be required to provide
counseling until the Department notifies schools that an interactive
online program has been included as part of the renewal of the service
agreement.

[[Page 15349]]

    The non-Federal negotiators were also concerned about the
information that would be required in each counseling session. Several
non-Federal negotiators asked the Department to add a requirement that
institutions convey specific information to students to notify them of
the various conditions that could preclude them from completing the
service obligation. Some non-Federal negotiators also asked the
Department to require institutions to provide information to students
about how to find low-income schools and high-need fields in initial
counseling as well as in exit counseling. In addition, non-Federal
negotiators asked the Department to clarify that if a student chooses
to study a field that is removed from the high-need field list before
the grant recipient begins teaching, that subject area is no longer a
high-need field and thus the recipient may not be able to use this
teaching in this field to fulfill the service obligation. The
Department added specific language to the initial and exit counseling
sections to address these concerns and reminded the non-Federal
negotiators that institutions will be able to direct students to the
Nationwide List that is published annually and available on the
Department's Web site. Also, Sec.  686.32(b) of the proposed
regulations would delineate the particular requirements for subsequent
counseling sessions, which are less comprehensive than the initial and
exit counseling session.
    The counseling requirement is an institutional responsibility. As
such, the Department encourages institutions to establish collaborative
working relationships between their financial aid office and the entity
that would be most knowledgeable about teaching requirements for TEACH
Grant recipients. For instance, several non-Federal negotiators
recommended that an institution's college of education or teacher
preparation program work closely with the financial aid office to
ensure that students receive the best information available about
financial aid as well as about academic requirements, teaching
opportunities, and teacher certification.

Frequency of Payment (Sec.  686.33)

    Statute: The HEA does not address this issue.
    Proposed regulations: Proposed Sec.  686.33 would provide that,
similar to the Federal Pell Grant, ACG, and National SMART Grant
program regulations, an institution may pay a student a TEACH Grant at
such times and in such installments that best meet the student's needs.
In addition, under this proposed section, the institution could pay the
student in a lump sum for all prior payment periods for which the
student was eligible and would have to determine the amount of the
payment based on the student's enrollment status according to the work
completed by the student for the payment period. To be eligible to
receive a lump sum payment for prior payment periods, the student would
have had to meet the eligibility criteria in proposed Sec.  686.11 for
the prior payment period with the exception that the student would not
have needed to sign the service agreement during that payment period.
However, the student would need to sign a service agreement prior to
receiving a disbursement as described in proposed Sec.  686.31.
    Reason: As is the case with the Federal Pell Grant, ACG, and
National SMART Grant programs, an institution should have the
flexibility to determine the timing and the amounts of any installments
of a student's TEACH Grant to best meet the needs of the student. Also,
consistent with the Federal Pell Grant, ACG, and National SMART Grant
programs, the institution should have the discretion to pay a student
in a lump sum for all prior payment periods for which the student was
eligible based on the coursework the student completed for the payment
period.

Institutional Reporting Requirements (Sec.  686.37)

    Statute: The HEA does not address the issue of institutional
reporting requirements in the TEACH Grant program.
    Proposed Regulations: Proposed Sec.  686.37 would require
institutions to provide the Secretary with information pertaining to a
student's eligibility to receive a TEACH Grant, the student's TEACH
grant amounts, and the actual disbursement dates and amounts of the
grants. This proposed section would also establish a submission
timeline for institutions.
    Reasons: The proposed regulations would require institutions to
submit eligibility and disbursement data to the Secretary because the
Department intends to contact TEACH Grant recipients on a quarterly
basis by sending interest statements and to collect annual service
agreements. To make this process work, the Department would need
eligibility and disbursement information.

Documenting the Service Obligation (Sec.  686.40)

    Statute: Section 420N(b)(1)(D) of the HEA requires that a TEACH
Grant recipient must, upon completion of each of the four required
elementary or secondary academic years of teaching service, provide
evidence of that teaching service in the form of a certification by the
chief administrative officer of the school in which the grant recipient
is teaching.
    Proposed Regulations: Proposed regulations in Sec.  686.40(a) would
provide that a TEACH Grant recipient must confirm to the Secretary in
writing that he or she has either begun employment as a full-time
teacher in accordance with the terms and conditions of the service
agreement, or that he or she is not yet employed as a full-time
teacher, but intends to meet the terms and conditions of the service
agreement.
    Proposed regulations in Sec.  686.40(b) would require that, if a
grant recipient has begun full-time teaching service in accordance with
the service agreement, he or she must provide documentation of that
service to the Secretary on an approved form certified by the chief
administrative officer of the school in which the grant recipient is
teaching. The documentation required under this proposed section would
need to show that the grant recipient is teaching in a high-need field
in the majority of classes taught during each elementary or secondary
academic year in a low-income school as a highly-qualified teacher.
    In addition to addressing documentation requirements for creditable
service performed by the grant recipient, proposed Sec.  686.40(b)
would provide that if the school at which the grant recipient is
employed meets the requirements of a low-income school in the first
year of the grant recipient's four academic years of teaching but fails
to meet those requirements in subsequent years, the subsequent years of
teaching would count toward fulfillment of the service agreement.
Similarly, proposed Sec.  686.40(c)(2) would provide that if a grant
recipient begins teaching in a high-need field listed in the Nationwide
List and in subsequent years the high-need field is no longer
designated as such, the subsequent years of teaching in that field
would count toward the service agreement.
    Proposed Sec.  686.40(e) would provide that if a grant recipient is
able to complete only one-half of an elementary or secondary academic
year because of a condition covered under the Family and Medical Leave
Act of 1993 (FMLA) for a qualifying serious health condition or
exigency, or because of a call to military service, either as a reserve
of the Armed Forces or a member of the National Guard, that half year
is counted as a complete year for purposes of completing the service
agreement as

[[Page 15350]]

long as the grant recipient's school employer considers the grant
recipient to have fulfilled his or her contract requirements.
    Lastly, proposed Sec.  686.40(f) would provide that a grant
recipient may teach in more than one low-income school during an
elementary or secondary academic year as long as the combined teaching
service is the equivalent of full-time teaching.
    Reasons: The purpose of proposed Sec.  686.40 would be to implement
the statutory requirements regarding the evidence a grant recipient
must submit to show compliance with the terms of his or her service
agreement. Proposed Sec.  686.40(b), (c)(2), (e), and (f) would be
consistent with regulations in the Title IV, HEA loan programs related
to teacher loan forgiveness so that TEACH Grant recipients who may be
performing teaching service to meet both their service agreement and
the requirements to receive loan forgiveness have only one set of
requirements.
    Several of the non-Federal negotiators voiced concern that the
Nationwide List that TEACH Grant recipients will use to document their
teaching service may not reflect high-need field shortages at the local
level. One of the non-Federal negotiators suggested that the Department
specify in proposed Sec.  686.40(c)(ii) a process whereby States would
be required to consult with LEAs so that high-need field shortages at
the local level are reflected. The Department declined to regulate in
this area because the process currently in place under 34 CFR
682.210(q) provides for the designation of high-need fields by an LEA
and because mandating such a process would be a Federal intrusion on an
inherently State function.
    During the negotiations, the Department suggested specifying in
proposed Sec.  686.40(e)(1) the conditions under which a grant
recipient may count an academic year of teaching service if that year
is interrupted by a condition that is covered under the FMLA. The non-
Federal negotiators agreed. For that reason, proposed Sec.
686.40(e)(1) would list the FMLA conditions as follows:
     The birth and subsequent care of a son or daughter.
     The adoption of a child or provision of foster care by a
grant recipient.
     Caring for a spouse, child or parent of the grant
recipient who has a serious health condition.
     A serious health condition that renders the grant
recipient unable to meet the requirements of the service agreement.
    The Department became aware after negotiations concluded that the
U.S. Department of Labor had developed new proposed regulations for the
FMLA that are currently out for public comment. To ensure that the
TEACH Grant regulations reflect all of the conditions covered by the
FLMA, we will consult with the Department of Labor when we develop
final regulations.

Periods of Suspension (Sec.  686.41)

    Statute: The statute does not address periods of suspension of the
eight-year period for completion of the TEACH Grant service obligation.
    Proposed Regulations: Proposed Sec.  686.41 would provide that a
TEACH Grant recipient who has completed or otherwise ceased enrollment
in a TEACH Grant-eligible program may request a suspension of the
eight-year time period for completion of his or her service obligation.
Proposed Sec.  686.41(a)(1)(i) and (ii) would require that a suspension
be based on enrollment in a TEACH Grant-eligible program of study or a
State-approved teacher certification program, or a condition under the
FMLA, respectively. Proposed Sec.  686.41(a)(2)(i) would require that
suspensions granted under these two conditions could not exceed a
combined total of three years. Proposed Sec.  686.41(a)(1)(iii) would
allow a suspension to be based on a call to active duty status for
members of the Armed Forces reserve or the National Guard. Proposed
Sec.  686.41(a)(2) would provide that suspensions granted because of a
military call-up would be granted in one-year increments and would end
upon the completion of the grant recipient's military service. Proposed
Sec.  686.41(b) would require a grant recipient to request a suspension
on an approved form within six months after completing or terminating
enrollment in a TEACH Grant-eligible program or within six months after
the date he or she stops teaching. Lastly, proposed Sec.  686.41(c)
would require grant recipients to provide the Secretary with
documentation supporting the suspension.
    Reasons: Although the HEA does not explicitly provide for a
suspension of the eight-year period for completion of a TEACH Grant
service obligation, the Secretary is proposing regulations in Sec.
686.41 that would provide TEACH Grant recipients with some flexibility
in limited circumstances with respect to the eight-year period for
completion. These limited circumstances would include enrollment in a
program of study for which the recipient would be eligible for a TEACH
Grant or enrollment in a program of study to obtain a certificate or
license to begin teaching. This flexibility would prevent TEACH Grant
recipients who, because of State requirements, must complete an
undergraduate degree and subsequently obtain the credential that
actually allows them to begin teaching, from being penalized with
regard to completion of their first service obligation. These limited
circumstances also would include conditions covered under the FMLA and
a call to military service as part of the Armed Forces reserve or the
National Guard, because the Secretary believes that TEACH Grant
recipients should not be placed at a disadvantage in completing their
service obligations as a result of a significant family illness or
situation or while defending their country in the event of a call to
active service in connection with a war, military operation, or a
national emergency.
    The non-Federal negotiators believed that the proposed regulations
in Sec.  686.41 would not adequately address situations that could
affect a TEACH Grant recipient's ability to meet the terms of his or
her service obligation within eight years after completing a TEACH
Grant-eligible program. Some non-Federal negotiators suggested that the
Secretary should allow a TEACH Grant recipient to suspend his or her
service obligation in the event of extenuating circumstances that
preclude the TEACH Grant recipient from completing his or her service
obligation in the required eight-year timeframe. The Secretary declined
to expand the circumstances for suspension. The Secretary believes such
an expansion would contradict the intent of the TEACH Grant program by
delaying the entry of highly-qualified teachers into high-need fields
in low-income schools where they are badly needed. The negotiating
committee agreed to the language in proposed Sec.  686.41.
    As noted elsewhere in this preamble, the portion of the language
related to the conditions covered by the FMLA will need to be
consistent with the Department of Labor regulations.
    While these regulations reflect FMLA regulations with regard to the
conditions under which a TEACH Grant recipient may request a
suspension, we would not require a TEACH Grant recipient to go through
the certification process specified in the FMLA regulations.

Discharge of Service Agreement (Sec.  686.42)

    Statute: The statute does not address the discharge of a service
obligation if a TEACH Grant recipient dies or becomes totally and
permanently disabled.

[[Page 15351]]

    Proposed Regulations: In the case of a TEACH Grant recipient who
dies, proposed Sec.  686.42(a) would require the discharge of the grant
recipient's service obligation upon receipt of an original or certified
copy of the TEACH Grant recipient's death certificate, an accurate and
complete photocopy of the original or certified copy of the grant
recipient's death certificate, or, on a case-by-case basis, reliable
information acceptable to the Secretary.
    In the case of a TEACH Grant recipient who becomes totally and
permanently disabled as that term is defined in 34 CFR 682.200(b),
proposed Sec.  686.42(b) would provide for a discharge of the service
obligation if the TEACH Grant recipient applies for and satisfies the
same eligibility requirements for a total and permanent disability
discharge of a Direct Loan in 34 CFR 685.213.
    Proposed Sec.  686.42(b)(2) would provide that the eight-year time
period in which the grant recipient must complete the service
obligation remain in effect during the conditional discharge period
described in 34 CFR 685.213(c)(2) unless the grant recipient is
eligible for a suspension based on the conditions covered by the FMLA.
Proposed Sec.  686.42(b)(3) would provide that interest continues to
accrue on each TEACH Grant disbursement received unless and until the
grant recipient's service agreement is discharged by the Secretary.
Lastly, proposed Sec.  686.42(b)(4) and (5) would provide that if the
grant recipient meets the eligibility requirements throughout the
three-year conditional discharge period, the service obligation is
discharged; if not, the grant recipient is once again subject to the
terms of the service agreement.
    Reasons: The Secretary believes that it would be appropriate to
provide a discharge of a TEACH Grant recipient's service obligation in
cases when the grant recipient cannot comply with his or her service
agreement because of death or total and permanent disability. Although
grant aid does not have to be repaid, the service agreement signed by a
TEACH Grant recipient is a binding, legal document requiring the
repayment of each TEACH Grant, along with interest accrued from the
date of disbursement, as a Federal Direct Unsubsidized Loan if the
service obligation is not met. A discharge of the service obligation
for death and total and permanent disability relieves the grant
recipient of a potential repayment obligation and is also consistent
with the treatment of Title IV, HEA loans.
    Proposed Sec.  686.42(b) would adopt the definition of totally and
permanently disabled already used in the Federal Direct Loan program
regulations. The definition of totally and permanently disabled (in 34
CFR 682.200(b)) is "the condition of an individual who is unable to
work and earn money because of an injury or illness that is expected to
continue indefinitely or result in death." A TEACH Grant recipient who
meets this definition of totally and permanently disabled cannot comply
with the service agreement because he or she cannot work and earn
money. The Department considered proposing regulations that would have
required a TEACH Grant recipient who became totally and permanently
disabled to request a conversion of his or her TEACH Grants to a
Federal Direct Unsubsidized Loan so that the existing process under
which the Secretary grants a total and permanent disability discharge
in the Direct Loan program would be available to the TEACH Grant
recipient. However, non-Federal negotiators persuaded the Department to
adopt a total and permanent disability discharge process that would
preserve the grant status of the TEACH Grant rather than mandate the
conversion of the TEACH Grant to a loan. The non-Federal negotiators
felt that a TEACH Grant recipient should have the opportunity to
fulfill his or her service obligation, if time remained in the eight-
year period, if the TEACH Grant recipient does not receive a final
total and permanent disability discharge. The non-Federal negotiators
also noted that if the eight-year time period elapsed while the grant
recipient was in a conditional discharge status, the TEACH Grant would
convert to a loan anyway.

Obligation To Repay the Grant (Sec.  686.43)

    Statute: Section 420N(c) of the HEA provides that if a TEACH Grant
recipient fails or refuses to comply with the service obligation, the
sum of the amounts of any TEACH Grants received by the recipient shall,
upon a determination of such failure or refusal in such service
obligation, be treated as a Federal Direct Unsubsidized Loan under part
D of Title IV of the HEA, and shall be subject to repayment, together
with interest thereon accruing from the date of the grant award.
    Proposed Regulations: Proposed Sec.  686.43 would require that
TEACH Grant amounts be converted into a Federal Direct Unsubsidized
Loan, with interest accruing from the date of each grant disbursement
if--
     The grant recipient, regardless of enrollment status,
requests the conversion for any reason;
     Within 120 days of ceasing enrollment in the institution
prior to completing the TEACH Grant-eligible program, the grant
recipient has failed to notify the Secretary in accordance with
proposed Sec.  686.40(a);
     Within one year of ceasing enrollment in the institution
prior to completing a TEACH Grant-eligible program, the grant recipient
has not been determined eligible for a suspension of the eight-year
completion period, has not re-enrolled in a TEACH Grant-eligible
program, or has not begun creditable teaching service to meet his or
her service agreement;
     The grant recipient completes the course of study for
which a TEACH Grant was received and does not actively confirm to the
Secretary, at least annually, his or her intention to satisfy the
service agreement; or
     The grant recipient completed a TEACH Grant-eligible
program but failed to begin or maintain teaching service in accordance
with the Service Agreement within the timeframe that would allow that
individual to complete the service obligation within the eight-year
completion period.
    Under proposed Sec.  686.43(b), a TEACH Grant that converts to a
Federal Direct Unsubsidized Loan would not be counted against the grant
recipient's annual or aggregate Stafford Loan limits.
    Under proposed Sec.  686.43(c), a grant recipient whose TEACH Grant
has been converted to a Federal Direct Unsubsidized Loan would enter
repayment immediately, would be eligible for all of the benefits of the
Direct Loan Program, and would not be eligible for any grace period.
    Finally, proposed Sec.  686.43(d) would provide that once a TEACH
Grant is converted to a loan, it cannot be reconverted to a grant.
    Reasons: The purpose of proposed Sec.  686.43 would be to implement
the statutory directive that a TEACH Grant converts to a Federal Direct
Unsubsidized Loan if the grant recipient fails or refuses to carry out
the terms of his or her service agreement. Because the conversion of a
TEACH Grant to a loan has the potential to subject a grant recipient to
a heavy debt burden, the Secretary beli