(2) Provided that such loan is to be repaid in substantially level annual installments of interest and principal over the term of the loan, except that interest only may be paid for an initial period not exceeding 5 years; and

(3) Contain such other terms and conditions as will assure the Commissioner that the support provided by the Government over the term of the loan is no more than is necessary to effectuate the purposes of this subpart.

(b) Financing plans may also be acceptable where the term of the loan is longer than 30 years or the annual installments of interest and principal are not substantially level, if the Commissioner finds that unusual circumstances warrant such exception: Provided, however, That in no event shall the term of the loan exceed 40 years. (20 U.S.C. 1132c-4)

§ 170.77 Evidence of lowest possible cost of loan.

An applicant shall demonstrate to the satisfaction of the Commissioner that the loan it proposes to obtain is at the lowest possible net interest cost. In the case of an applicant proposing to issue tax-exempt bonds to finance the construction of academic facilities, a sale pursuant to public advertising or bids for the securities in an advertising medium acceptable to the Commissioner will be deemed to meet this requirement. Prior to advertising bonds for sale, the applicant shall submit to the Commissioner for approval a draft of the proposed notice of sale and a statement of essential facts concerning the sale. An applicant not issuing tax-exempt securities will be expected to submit offers from at least three (3) lending institutions normally engaged in making long term construction loans. The applicant must have furnished each such institution with the information necessary to enable it to specify in its offer the amount, interest rate, maturity period, security and prepayment provisions of the loan. A loan offer must be approved by the Commissioner before the applicant enters into a firm and binding agreement with a lender.

(20 U.S.C. 1132c-4)

§ 170.78 Annual interest grant agreement.

Upon approval of an application for annual interest grant, the Commissioner shall prepare and send to the applicant a proposed agreement, which shall contain the terms and conditions relating to the receipt of an annual interest grant including a description of the project and the facilities, the maximum principal amount of the loan (or portion thereof) on account of which annual interest grants payments will be made, the maximum annual grant amount and the anticipated terms of the annual interest grant payments. The proposed agreement shall also provide that where a loan is not consummated prior to execution of such agreement by the Commissioner, no grant shall be made thereunder unless the Commissioner concurs in the rate of interest and other terms and conditions of the loan. The agreement once executed by the applicant and the Commissioner creates a contractual obligation on the part of the Commissioner to make annual interest grants in future years in accordance with the terms and conditions of the agreement for so long as the applicant carries out its obligations under the agreement. The agreement for annual interest grants is not entered into for the benefit of, nor to induce the making of loans by or the sale of bonds to, third parties, and the Commissioner shall not entertain grievances or claims of such third parties.

(20 U.S.C. 1132c-4)

§ 170.79 Payment of annual interest grants.

Payments under an annual interest grant agreement will be made by the Government once a year. The date of such payment will coincide as closely as possible with the anniversary date of the loan or, a date during the year when debt service requirement related to the loan is greatest. Once established, the payment date shall remain fixed for the duration of the loan. The first payment shall accrue from a date not earlier than the date of initial use of the project to the date established for the annual payment. The last payment will accrue from the effective

date of the next-to-last payment to the date the loan is completely repaid. Payment of annual interest grants shall be made directly to the grantee or to a trustee, paying agent, or lender pursuant to an assignment of such payments by the grantee.

(20 U.S.C. 1132c-4)

§ 170.80 Reduction of grant where refinancing produces lower costs.

Where the Commissioner finds that the applicant could have accelerated repayment of the loan outstanding and obtained a new loan where to do so would have resulted in a net savings in the cost of the loan, the amount of annual interest grants shall be computed as if such refinancing had been undertaken.

(20 U.S.C. 1132c-4)

§ 170.81 Priority considerations; closing dates.

Priority shall be given first to applications from public community colleges and public technical institutes, developing institutions (as defined in § 170.1) and to institutions enrolling 20 percent or more students from lowincome families. All applications from other institutions of higher education will be considered next. Within the two priority categories, applications shall be processed in such manner as is appropriate to encourage distribution of the available funds to those institutions or branch campuses that are (a) in urgent need of additional academic facilities to meet increasing enrollments or to prevent a decrease in enrollment due to inadequate facilities and (b) committed to the enrollment of substantial numbers of veterans. Closing dates by which applications must be filed in order to be considered for funds allocated for such closing date shall be on September 1 and February 1 in each fiscal year in which funds are available unless otherwise announced by the Commissioner. Applications filed by September 1 will be considered as filed for the February 1 closing date. Available funds will be divided equally among closing dates. (20 U.S.C. 1132c-4)

171.5 Criteria for standards and methods to determine relative priorities of eligible projects.

171.6 Criteria for standards and methods to determine Federal shares of eligible projects.

171.7 Fiscal control and fund accounting procedures.

171.8 Retention of records. 171.9 State plans.

171.11 Determination of costs eligible for Federal participation.

AUTHORITY: Secs. 601-609, 1201-1204 of Pub. L. 89-329, as amended, 79 Stat. 12611266, 1269-1270 as amended (20 U.S.C. 11211129, 1141-1142b), unless otherwise noted.

SOURCE: 39 FR 12950, Apr. 9, 1974, unless otherwise noted.

§ 171.1 Definitions.

As used in this part:

"Act" means Public Law 89-329, the Higher Education Act of 1965, as amended. Unless otherwise indicated, title references are to titles of the Act. All terms defined herein shall have the same meaning as given them in section 1201(a) of the act.

"Branch campus" means a campus of an institution of higher education which is located in a community different from that in which its parent institution is located. A campus shall not be considered to be located in a community different from that of its parent institution unless it is located beyond a reasonable commuting distance from the main campus of the parent institution.

(20 U.S.C. 1125(a).)

"Category" refers to Category I (laboratory and other special equipment) or Category II (television equipment for closed-circuit direct instruction).

"Combinations of institutions of higher education" means a group of institutions of higher education that have entered into a cooperative arrangement for the purpose of carrying out a common objective, or a public or private nonprofit agency, organization, or institution designated or created by a group of institutions of higher education for the purpose of carrying out a common objective on their behalf.

(20 U.S.C. 1141(j).)

"Developing institution" means an eligible institution of higher education which has the desire and potential to make a substantial contribution to the higher education resources of our Nation but which for financial and other reasons is struggling for survivial and is isolated from the main currents of academic life.

(20 U.S.C. 1051.)

"Expenditures for instructional and library purposes" means the sum of "expenditures for instruction and departmental research" and "library expenditures".

"Expenditures for instruction and departmental research" include all expenditures of instructional departments, including salaries, office expense and equipment, laboratory expense and equipment, and other expenses. The term includes research not separately organized or separately budgeted, but excludes sponsored research and other separately budgeted research.

"Library expenditures" includes the total expenditures for separately organized libraries, both general and departmental, including those for salaries, wages, other operating expenses, books, subscriptions, and binding costs.

continuations,

"Full-time equivalent number of students" means for purposes of determining State allotments, the number of full-time students enrolled in programs which consist wholly or principally of work normally creditable

toward a bachelor's or higher degree plus one-third of the number of students enrolled in programs which are not chiefly transferable toward a

bachelor's or higher degree, plus 28 percent of the remaining number of students. Student enrollment figures for each fiscal year for the purpose of this computation shall be those listed in the most recent edition of the Office of Education publication "Opening Fall Enrollment in Higher Education".

"Institutional fiscal year" means for a particular institution, combination of institutions, or branch campus, a period of one year, not necessarily corresponding with the school year, at the end of which financial accounts are closed and reports made.

"Eligible subjects" means courses at the undergraduate level in science, mathematics, foreign languages, history, geography, government, English, other humanities, the arts, and education, or any interdisciplinary educational activity embodying such course or a combination thereof.

(20 U.S.C. 1123(2)(A).)

a

"Laboratory and other special equipment and materials" means items of equipment, as defined in this section, and materials, as defined in this section, which are to be used in providing instruction in eligible subjects in institutions of higher education. The term does not include items for non-instructional uses such as organized research or general administration nor does it include general purpose furniture, radio or television broadcast apparatus or items for the maintenance or repair of equipment.

"Project" means a separate proposal for improvement of undergraduate instruction in one or more of the eligible subjects through either (a) the acquisition (by purchase, lease-purchase, or lease) and use of laboratory and other special equipment and materials (and directly associated minor remodeling), or (b) the acquisition (by purchase, lease-purchase or lease) and use of television equipment and materials for closed-circuit direct instruction (and directly associated minor remodeling). (20 U.S.C. 1124(a).)

"Semester credit hour equivalent" means the unit of credit which the institution awards to a student for a class meeting one hour per week for a semester or a laboratory meeting two or three hours per week for a semester. The total shall include all failure, withdrawal, or incomplete listings that appear on the student's permanent record. For purposes of this definition the term "semester" means a period of approximately 15 weeks of instruction. Where credits are recorded at an institution or branch campus on the basis of some other length or term, such as a "quarter", or where credits are not normally recorded, the credit hours of other units of accomplishment are to be converted to semester hour equivalents for purposes of reporting in applications submitted under this part. Any such conversions to semester credit hour equivalents shall be supported by definitive explanations satisfactory to the State commission, of the basis on which the conversions are calculated and shall in all cases be subject to adjustment by the State commission.

(20 U.S.C. 1122(a)(1)(A).)

ment, transmitters, receivers and associated distribution equipment, antennas, and supporting towers for instructional television fixed services as defined by the Federal Communications Commission and for point-to-point microwave relay equipment, but does not include towers, antennas, or broadcast transmitters designed to operate on VHF or UHF frequencies in the standard broadcast band. "Closed-circuit direct instruction" includes all uses of television equipment and materials involving the distribution of television instruction from any source such as television cameras, film chains, videotape recording or playback apparatus, monoscope devices or receiving antennas, to one or more television monitors or receivers at one or more viewing locations. The term does not include closed-circuit installations for any noninstructional uses, such as monitoring for security purposes.

(20 U.S.C. 1123(2)(B).)

"Textbook" means a book or workbook or manual which is used as a principal source of study materials for a given class or group of students, a copy of which is expected to be available for the individual use of each student in such a class or group.

(20 U.S.C. 1123(2)(A).)

"Undergraduate level" programs of instruction mean all courses of regular length which are intended primarily for meeting program requirements for students pursuing bachelor's degrees or first professional degrees in programs which do not require 3 or more years of previous college work for entry and do not extend beyond the fifth year of college, students pursuing associate degrees, or students enrolled in terminal-occupational programs. Not included under this definition are courses which are intended primarily for meeting program requirements for students pursuing graduate degrees or first professional degrees in programs extending beyond the fifth year of college or requiring 3 or more years of previous college work for entry into a first professional degree program. Also excluded are non-credit courses and conferences.

(20 U.S.C. 1141(a).)

§ 171.2 General provisions.

Assistance provided under this par is subject to applicable provisions contained in Subchapter A of this chapter (relating to fiscal, administrative, property management, and other matters).

(20 U.S.C. 1121, 45 CFR 100a.)

§ 171.3 Conditions for grant approval.

Before approving a grant under this part, the Commissioner shall verify:

(a) That the institution qualifies as an institution of higher education under section 1201(a) of the Act;

(b) That the application contains the assurances required by and meets all the other conditions set forth in section 605(b) of the Act;

(c) That the applicant shows evidence of meeting the maintenance of effort requirement under section 604;

(d) That the applicant has certified that none of the equipment or materials covered by the project will be used for sectarian instruction or religious worship, or primarily in connection with any part of the program of a school or department of divinity, as defined in section 609 of the Act, and

(e) Where a combination of institutions is involved, that each institution individually meets the above basic eligibility requirements.

(20 U.S.C. 1141(a), 1125(b), 1124(b), and 1129.)

§ 171.4 Submission and processing of applications.

(a) Closing dates for filing applications. (1) Closing dates by which applications may be filed with and accepted by the State commission shall be established in the State plan. Separate applications must be filed for grants in each category. Unless otherwise provided in the State plan the date of receipt of a complete application shall be determined by the United States Post Office postmark date when mailed or by the date of physical receipt if hand delivered. Where a closing date falls on a non-business day, the closing date shall be the first business day thereafter as determined by the State commission.

(2) The State plan shall provide for not more than two closing dates per category set forth in section 601(b) and (c) of the Act for any Federal fiscal year, and all such closing dates shall be between October 15 and February 15. The total allotment shall be available for grants as of the first applicable closing date in each Federal fiscal year.

(20 U.S.C. 1123.)

(b) Submission of project applications. Applications for grants under this part may be submitted only by institutions of higher education or by a combination of such institutions. Such applications shall be submitted on forms provided by the Commissioner directly to the appropriate State commission in the number of copies specified by the State commission. Each application shall provide information on deficiencies to be remedied and describe a plan for improvement, and also contain such supplemental information as may be required by the State commission. Applications shall cover a single institution, or branch campus of an institution, or a combination of such institutions. Unless otherwise provided in the applicable State plan, not more than one application shall be submitted for any single institution, branch campus, or any combination of institutions for a particular fiscal year. Where an institution is part of a combination of institutions, the filing of a separate application by a participating institution shall not be precluded by filing as part of a combination. The State commission shall accept all complete applications under this part provided such applications are submitted in accordance with the above limitations and shall officially record the date of receipt of each such complete application. Any application which is incomplete shall be returned promptly to the applicant with an explanation of deficiencies to be corrected before the application can be accepted for consideration by the State commission as of the next closing date in the current fiscal year, if any. (20 U.S.C. 1124(a).)

(c) Verification of application data and institutional and project eligibil