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

(Sec. 17, 80 Stat. 1245, 20 U.S.C. 443 (a)) [30 F.R. 994, Jan. 30, 1965, as amended at 31 F.R. 825, Jan. 21, 1966; 32 F.R. 4162, Mar. 17, 1967]

Subpart C-Application

§ 142.3 Application for loan.

A private non

(a) Filing application. profit elementary or secondary school, or its governing authority, desiring to borrow funds under the regulations in this part shall file an application for that purpose with the Commissioner.

(b) Content of application. Such an application shall include:

(1) An appropriate identification of the applicant school;

(2) Satisfactory evidence of the applicant's eligibility as a private nonprofit elementary or secondary school;

(3) Statements of financial condition and information concerning cerdit of the applicant and of any proposed guarantor;

(4) A request for a loan in a definite amount;

(5) A proposed plan of repayment of principal with interest not to extend beyond 10 years from the date of the loan;

(6) An itemized list of the equipment, including materials, which is proposed to be acquired with the loan funds and the estimated cost thereof, the list to be organized by subject area and grade level (i.e., elementary or secondary) at which the equipment is to be used;

(7) If funds are requested for minor remodeling, a full description of the work to be done, the estimated cost thereof, and the necessity for such minor remodeling in order to make effective use of equipment;

(8) A certification that the equipment is to be used primarily for providing education in the critical subjects, except that in the case of storage equipment it

will be used solely for the care and protection of equipment, including materials for providing education in the critical subjects, and a certification that the minor remodeling, if any, is to be performed to make more effective use of equipment in providing education in the critical subjects;

(9) A description showing the direct relationship of the proposed expenditures to the overall design for enriching the planned educational program and the achievement of desired curriculum goals in the critical subject areas; and

(10) Such additional information as the Commissioner may require.

(c) Authorization for application. The application shall be signed by an authorized representative of the school, and shall contain satisfactory evidence of(1) The authority to make the loan application;

(2) The authority of the person signing the application to act as the representative of the school and to negotiate for the loan;

(3) The legal identity of the corporation, association or other entity that will be the maker of the note; and

(4) The designation, by title, of the officer, or officers, empowered to execute the note on behalf of such entity.

Subpart D-Loan Procedures

§ 142.4 Review of application.

Action with respect to approving a loan application will be taken only after a review of information contained in the application and any other pertinent information which the Commissioner may possess.

§ 142.5 Action on approved application.

(a) Execution of note. After the Commissioner approves an application for & loan, he will so notify the applicant and will require the execution of a promissory note, which will include a schedule of payments of principal, with interest accruing on the unpaid principal of the loan to the dates of such payments.

(b) Payment to school. Upon receipt of a duly executed note, the Commis

asioner will cause the loan funds to be paid by the U.S. Treasury to the applicant at -: the time loan funds will be needed.

(c) Cancellation of loan approval. If the applicant does not request the loan funds within a reasonable time, the Commissioner may cancel the approval of the loan.

§ 142.6 Loan conditions.

(a) Limitation on amount. Each loan will be limited to the amount which may reasonably be expected to be expended without undue delay for the acquisition of equipment or for minor remodeling. (b) Assurance of repayment. All loans will be made on the basis of such security or evidence of financial responsibility as will reasonably assure repayment.

(c) Use of loan funds. All loans will be subject to the condition that the funds borrowed will be used only for the acquisition of equipment, or for the performance of minor remodeling, substantially similar to the project described in the approved application.

(d) Unused and unreported funds. Loan funds that are not used within a reasonable time for the purposes set out in paragraph (c) of this section, and loan funds used but not reported as required in § 142.9, shall immediately become due and payable, with interest accrued thereon. This paragraph shall not apply if the total amount not used for the acquisition of equipment, or for the performance of minor remodeling, and not reported does not exceed two percent of the amount lent or $200, whichever is smaller.

(e) Misused funds. Loan funds that are used for purposes other than those provided for in § 142.1 shall immediately become due and payable, with interest accrued thereon.

(f) Disposal and diversion of equipment acquired. If during the period of the loan the applicant disposes of equipment or diverts its use, the balance of the loan shall, at the option of the Commissioner, become immediately due and payable, with interest accrued thereon. Any such diversion not consistent with the

Act and regulations, and any such disposal, shall be reported to the Commissioner. Equipment acquired under an approved project for the critical subjects may be used when available and suitable in providing education in other subjects, if there exists a critical need therefor in the judgment of the borrower. Equipment shall be deemed available only when it is not needed for the time being for use in the critical subjects.

(g) Time of acquisition. Loan funds shall not be used for the acquisition of equipment, including minor remodeling, for which firm commitments have been made prior to the approval of the application.

(h) Equipment from a Communist country. Annual appropriation acts for the Department of Health, Education, and Welfare have provided that no part of the funds appropriated for "Defense Educational Activities" shall be available for the purchase of teaching equipment, or equipment suitable for use for teaching, in certain subjects, which can be identified as originating in or having been exported from a Communist country, unless such equipment is unavailable from any other source. Accordingly, such a condition would apply to all loans made under sections 305 and 1008 of the Act. A violation of such a condition would constitute a misuse of funds which will cause them to become immediately due and payable, with interest accrued thereon. Inquiry should be made of the Commissioner if the applicant has any question whether a specific proposed use of loan funds might violate such a condition.

obtained to the nearest one-eighth of one per centum.

(b) Effective interest rate. The interest rate in effect at the time a loan is approved will remain in effect for the life of the loan.

(c) Date of loan. The date of the US. Treasury check paying the funds to the applicant will be the date of the loan and the date from which interest accrues.

§ 142.8 Repayment.

(a) Schedule of repayments. Repayments of principal with accrued interest shall be made on such dates as may be agreed upon by the Commissioner and the applicant.

(b) Date of maturity. A loan may be made for any period of time except that the date of maturity shall be not more than ten years after the date on which the loan is made.

(c) Prepayment. Loans may be prepaid in full or in part at any time, with accrued interest to the date of payment, without penalty for prepayment.

§ 142.9 Reports and records.

(a) Reports. Each applicant receiving a loan shall furnish a completion report upon completing the approved project, and shall furnish such progress or other reports as the Commissioner may from time to time require regarding the use of loan funds.

(b) Records. Each applicant receiving a loan shall keep the loan in a separate bank account or maintain a separate accounting of such funds sufficient readily to identify all transactions with the loan funds. Each such applicant shall also maintain intact all records supporting the use of loan funds for three years after receipt of such funds, or until the loan has been repaid in full, whichever is later. Such records shall be made available to fiscal representatives of the Government for audit purposes.

Subpart G-The Humanities and The

Arts

SOURCE: The provisions of this Subpart G appear at 31 F.R. 825, Jan. 21, 1966, unless otherwise noted.

§ 142.20 Acquisition of equipment and minor remodeling for instruction in the humanities and the arts.

(a) The Commissioner will reserve 12 percentum of the funds appropriated pursuant to section 12 of the National Foundation on the Arts and the Humanities Act of 1965 (P.L. 89-209) and will allot the amount so reserved among the several States (other than the Canal Zone) in the same manner as is provided for in section 305(a) of the National Defense Education Act of 1958, and will reallot such funds among such States in the same manner as is provided for in section 302(c) of said National Defense Education Act of 1958.

(b) Funds alloted or realloted under paragraph (a) of this section will be available for the acquisition of equipment and minor remodeling for use in providing education in the humanities and the arts and administered in the same manner as funds similarly allotted or reallotted under sections 305(a) and 302(c) of the National Defense Education Act of 1958 for the acquisition of equipment and minor remodeling for use in providing education in the critical subjects are administered under Subparts A through D of this part.

§ 142.21 Definitions.

As used in this subpart:

(a) The term "The humanities" includes, but is not limited to, the study of the following: Language, both modern and classic; linguistics; literature; history; jurisprudence; philosophy; archeology; the history, criticism, theory, and practice of the arts; and those aspects of the social sciences which have humanistic content and employ humanistic methods.

(b) The term "The arts" includes, but is not limited to, music (instrumental and vocal), dance, drama, folk art, creative writing, architecture and allied fields, painting, sculpture, photography, graphic and craft arts, industrial design, costume and fashion design, motion pictures, television, radio, tape and sound recording, and the arts related to presen

(a) "Act" means the National Defense Education Act of 1958, as amended, 20 U.S.C. Ch. 17.

(b) "Commissioner" means the United States Commissioner of Education, Department of Health, Education, and Welfare.

(c) "Department" means the Department of Health, Education, and Welfare. (d) "Elementary school" means school which provides elementary education, as determined under State law.

(e) "Fiscal year," as used with respect to reporting and accounting requirements, means the period beginning on the first day of July and ending on the following June 30. (The calendar year of the ending date is used to designate the fiscal year.)

(f) "Junior college" means an institution of higher education which (1) is organized and administered principally to provide a two-year program which is acceptable for full credit toward a bachelor's degree; (2) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate;

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(3) is legally authorized within the State to provide a program of education beyond secondary education; (4) is a public or other nonprofit institution; (5) is accredited as a junior college by a nationally recognized accrediting agency or association or, if not so accredited, is an institution whose credits are accepted, on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited; and (6), if a branch of an institution of higher education offering four or more years of higher education, is located in a community different from, and beyond a reasonable commuting distance from, the community in which the main campus of the parent institution is located.

(g) "Local educational agency" means a board of education or other legally constituted local school authority having administrative control and direction of public elementary or secondary schools in a city, county, township, school district, or other political subdivision in a State, or any other public institution or agency having administrative control and direction of a public elementary or secondary school.

(h) "Public," as applied to any school or institution, includes a school or institution of any agency of the United States, except that no such school or institution shall be eligible to receive any grant, loan, or other payment under the Act.

(i) "Secondary school” means a school which provides a secondary education, as determined under State law.

(j) "State" means a State of the Union, Puerto Rico, the District of Columbia, the Canal Zone, Guam, American Samoa, or the Virgin Islands.

(k) "State educational agency" or "State agency" means the State board of education or other agency or officer primarily responsible for the State supervision of public elementary and secondary schools, or, if there is no such officer or agency, an officer or agency designated by the governor or by State law.

(1) "Technical institute" means an institution of higher education which (1) is organized and administered principally to provide a two-year program in engineering, mathematics, or the physical or biological sciences which is de

signed to prepare the student to work as a technician and at a semiprofessional level in engineering, scientific, or other technological fields which require the understanding and application of basic engineering, scientific, or mathematical principles or knowledge; (2) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate; (3) is legally authorized within the State to provide a program of education beyond secondary education; (4) is a public or other nonprofit institution; (5) is accredited as a technical institute by a nationally recognized accrediting agency or association or, if not so accredited, is an institution whose credits are accepted, on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited; and (6), if a branch of an institution of higher education offering four or more years of higher education, is located in a community different from, and beyond a reasonable commuting distance from, the community in which the main campus of the parent institution is located.

Subpart B-State Plan-General
Provisions

§ 143.2 State plan.

(a) Purpose. A basic condition for the payment of Federal funds to a State under sections 501-504 of the Act is a State plan meeting the requirements of sections 503 (a) and 1004 (a) of the Act by providing (1) a program for testing students, as specified in subpart F of these regulations, in the public elementary and secondary schools or in the public junior colleges and technical institutes of such State, and, to the extent authorized by law in other elementary and secondary schools and in other junior colleges and technical institutes in such State; (2) a program of guidance and counseling, as specified in subpart G of these regulations, in the public elementary and secondary schools or public junior colleges and technical institutes of such State; (3) that the State agency will be the sole agency for administering the plan; (4) that the State agency will make such reports as the Commissioner deems necessary; and (5) for fiscal con