on the effective dates of the Peace Corps Act or the Economic Opportunity Act of 1964 unless with the consent of the then obligee institution. Any such period shall not be included in determining the 10-year period in which the repayment must be completed. The institution may also provide that installments need not be paid during any period or periods, aggregating not in excess of 3 years, during which the borrower is in less than half-time attendance at an institution of higher education taking courses which are creditable toward a degree, and may also provide that any such period shall not be included in determining the 10year period during which the repayment must be completed, but interest shall continue to accrue during any such period.

(g) Revision of repayment schedule. In the event that a student who has borrowed from the Fund is unable, due to extraordinary circumstances, to comply with his obligations in regard thereto, he may make application to the institution to whose Fund he is indebted for revision of his schedule of repayment. Such application shall be reviewed by the institution for determination as to appropriate action to be taken and, where the action taken by the institution involves an extension beyond the 10-year period pursuant to section 205(b) (2) (C) of the Act, such action shall be reported to the Commissioner.

(h) Late payment charges. An institution may assess a charge with respect to a loan from the loan fund established by the institution pursuant to this part for failure of the borrower to pay all or any part of an installment when it is due, and in the case of a borrower who is entitled to deferment benefits under section 205(b)(2) of the Act, or cancellation benefits under section 205(b)(3) of the Act, for any failure to file timely and satisfactory evidence of such entitlement. The amount of any such charge may not exceed

(1) In the case of a loan which is repayable in monthly installments, $1 for the first month or part of a month by which such installment or evidence is late and $2 for each such month or part of a month thereafter; and

(2) In the case of a loan which has a bimonthly or quarterly repayment interval, $3 and $6, respectively, for each interval or part thereof by which such installment or evidence is late.

The institution may determine the time of assessment and collection of any such charges, except that no such charge may be added to the principal amount of the loan prior to the first day after the day on which such installment or evidence was due, and if not added to the principal amount of the loan, no such charge shall become payable prior to the due date of the next installment after receipt by the borrower of written notice thereof.

(i) Teacher cancellation. (1) For service as a full-time teacher in a public or other nonprofit elementary or secondary school in a State, in an institution of higher education, or in an elementary or secondary school overseas of the Armed Forces of the United States, except for any academic year for which a borrower is entitled to cancellation pursuant to subparagraph (2) of this paragraph, there shall be canceled, at the rate of 10 per centum of the total amount of his loan plus interest thereon for each complete academic year or its equivalent (as defined in section 144.2) of such service, an amount not to exceed 50 per centum of the total amount of his loan plus interest thereon.

(2) Commencing with the school year 1966-67, for service as a full-time teacher in a public or other nonprofit elementary or secondary school which is in the school district of a local educational agency eligible in that year for assistance pursuant to title II of P.L. 874, 81st Congress, as amended, and which for the purpose of this section and for that year has been determined by the Commissioner to be a school with a high concentration of students from lowincome families (as determined in accordance with § 116.4 of this chapterFinancial Assistance to Local Educational Agencies for the Education of Children of Low-Income Families), a borrower may cancel his loan at the rate of 15 per centum of the total amount of his loan plus interest thereon for each complete academic year or its equivalent (as defined in § 144.2) of such service. The Commissioner's determination shall be based upon a ranking of such schools with a high concentration of students from low-income families, submitted by the State educational agency for the State in which the school is located, but in no event shall include more than 25 per centum of the total of the public and other nonprofit elementary and secondary schools of that State. Schools in eligible school districts shall be ranked

on the basis of objective standards and methods approved by the Commissioner which take into account the numbers and percentages of students from lowincome families in attendance in such schools. With respect to each school year, the Commissioner shall make available to each State educational agency a list of schools which have been determined to be those with a high concentration of students from low-income families.

(3) Nothing in this section authorizes the refunding of any payment.

[31 F.R. 7463, May 24, 1966; 31 F.R. 10575, Aug. 6, 1966] § 144.9

Oath or affirmation.

In conformity with section 1001 (f) of the Act, no loan shall be made or funds advanced to any individual unless during the school year in which the loan or advance is made such individual has taken and subscribed to an oath or affirmation in the following form:

I do solemnly swear (or affirm) that I bear true faith and allegiance to the United States of America and will support and defend the Constitution and laws of the United States against all its enemies, foreign and domestic.

§ 144.10 Provisions for loan cancellations.

(a) Full-time teaching. The determination as to whether or not a studentborrower is entitled to have any portion of his loan canceled for service as a full-time teacher in a public or other nonprofit elementary or secondary school within a State, in an institution of higher education, or in an elementary or secondary school overseas of the Armed Forces of the United States in accordance with section 205(b) (3) of the Act, shall be made by the institution to whose Fund such loan is payable upon receipt and evaluation of an application for cancellation from such student.

(b) Permanent and total disability. Determinations (based on medical evidence supplied by the borrower) as to whether or not a student is entitled to a cancellation of indebtedness in accordance with section 205(b) (6) of the Act on the basis of permanent and total disability shall be made by the institution to whose Fund the borrower is indebted, subject to approval of the Commissioner.

(c) Death. The determination as to whether or not a student is entitled to a cancellation of indebtedness in accord

(a) In general. The Fund shall be deposited and carried in a special account of the institution, and shall be used only for the purposes designated in § 144.4(c) (3). The Federal capital contribution shall be deposited promptly into the Fund with the full and proper amount of the institution's capital contribution. There shall be in the Fund at all times monies representing the institutional capital contribution equal to at least one-ninth of the amount of the balance of the Federal capital contributions in such Fund.

(b) Payment of loans. (1) Loans from the Fund shall be made to studentborrowers from the Fund in such installments as are deemed appropriate by the institution, except that no borrower may receive more, during a given semester, term or quarter, than he needs for such period.

(2) No monies shall be advanced to any student-borrower from the Fund unless at the time of such advancement he is at least a half-time student.

(3) Upon failure of a student-borrower to maintain satisfactory standing, the institution shall withhold any or all further installments of his loan as may be appropriate.

(c) Collection of loans. Each institution at which a Fund is established shall accept responsibility for and use due diligence in effecting collection of all amounts due and payable to the Fund in connection with loan transactions of the Fund. The institution shall use such collection practices as are generally accepted among institutions of higher education and which are at least as extensive and forceful as those used in the collection of other student loan accounts due the institution. In the exercise of due diligence, the institution shall:

(1) Conduct, whenever possible, an exit interview with each borrower prior to separation and provide the borrower with a copy of his repayment schedule (which shall specify the dates and amounts of installments as they become due),

(2) Maintain contact with borrower after separation in order to facilitate bill

ing at the time the first installment falls due,

(3) Establish and maintain regular billing and followup procedures during the period in which any outstanding balance remains unpaid, and

(4) Establish such further collection procedures as the institution may consider appropriate to effect prompt and regular repayments.

(d) Records and reporting. (1) Each institution shall maintain, on a current basis, adequate records which reflect all transactions with respect to the Fund, and shall establish and maintain such general ledger control accounts and related subsidiary accounts as are prescribed by the Commissioner. Such records shall:

(i) Meet at least the minimum standards prescribed by the Commissioner as set forth in the most recent official National Defense Student Loan Program Manual of Policies and Procedures and other official guidelines that may be issued from time to time,

(ii) Be maintained in such a manner as to separately identify all Fund transactions from all other institutional funds and actvities,

(iii) Reflect the separate deposit into the Fund of Federal capital contributions and institutional capital contributions.

(iv) In instances where the institution exercises the option to assess charges for late payments of installments due or for late filing of required certificates of cancellation and/or deferment in accordance with § 144.8(h), reflect the payment of such charges through separate journal entries or in a separate ledger account.

(v) Reflect each transaction so as to afford ready identification of each borrower's account and status thereof, and

(vi) Contain full and proper documentation to support each cancellation entry for reason of death, permanent and total disability, or teaching service. If a fiscal agent is utilized by the institution, its function must be limited solely to the performance of ministerial acts. The responsibilities of the institution to make determinations relative to the making and collection of loans cannot be delegated.

(2) Institutions shall submit such reports and information as the Commissioner may reasonably require in connection with the administration of the Act and shall comply with such provi

sions as he may find necessary to insure the correctness and verification of such reports. Annual reports of Fund status and transactions shall be forwarded to the Commissioner by each institution within thirty days of the close of each fiscal year.

(3) Institutions shall retain pertinent records of Fund activites, including oaths subscribed to pursuant to § 144.9, until such time as agreed upon with the Commissioner that there is no further need for retention.

(e) Internal controls. (1) The Fund shall be administered in each institution in such a manner as to provide for an adequate system of internal controls. Wherever practical, approval of loans, collection of loans, disbursement of loan funds, and recordkeeping shall be divided so as to prevent the handling of all aspects of the loan program by a single individual.

(2) Promissory notes arising out of student loan transactions must be adequately safeguarded and maintained in good order in a secure location which is preferably fireproof and can be locked when not in use. Only authorized personnel shall have access to these notes. § 144.12 Compliance by institutions.

If, at any time, after notice and opportunity for hearing, the Commissioner determines (a) that the requirements for an institution's participation in the student loan program are no longer met, or (b) that any monies in the Fund or to be deposited therein have been expended for purposes for which the Fund is legally unavailable and such diversions have not been restored, or (c) it is determined by the Commissioner that the institution has not exercised due diligence in the administration and management of the Fund, no further Federal capital contributions shall be made to such Fund and no further expenditures shall be permitted to be made from such Fund until there is no longer any failure of such compliance.

§ 144.13 Preceding provisions not exhaustive of jurisdiction of the Commissioner.

No provision of this part now or hereafter promulgated shall be deemed exhaustive of the jurisdiction of the Commissioner under the Act. The provisions of this part may be modified or further regulations may be issued hereafter as circumstances may warrant.

145.2 Summary of program.

145.3 Approval of graduate programs. 145.4 Payments to institutions.

145.5 Records substantiating payments. 145.6 Award of fellowships to individuals. 145.7 Payments of stipends.

145.8 Reports by institutions of higher education.

145.9 Fellowships awarded after September 22, 1961.

AUTHORITY: The provisions of this Part 145 issued under sections 401-405, 1001, 72 Stat. 1590-1591, 1602; 20 U.S.C. 461-465, 581. SOURCE: The provisions of this Part 145 appear at 25 F.R. 9289, Sept. 29, 1960, unless otherwise noted.

(a) "Act" means the National Defense Education Act of 1958, Public Law 85-864, as amended, 72 Stat. 1580, 20 U.S.C. 401-589.

(b) "Title IV" means title IV of such Act.

(c) "Institution of higher education" or "institution" means an educational institution in any State which meets the requirements set forth in section 103(b) of the Act. The term "educational institution" limits the scope of this definition to establishments at which teaching is conducted and which have an identity of their own. The separate identity of such establishments is generally reflected by their being incorporated or chartered for such purposes in their own right, or by their receiving a separate listing in part III of the Office of Education "Education Directory."

(d) "Public" as applied to any institution does not include an institution of any agency of the United States.

(e) "Nonprofit" as applied to any institution means an institution owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

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

(g) "Fellowship" means an award by the Commissioner under Title IV. A "Fellowship holder" or "Fellow" means a person designated to receive the award, which entitles him to receive the stipend.

(h) "Approved program" means a program of graduate study approved as provided in § 145.3.

(i) "Commissioner" means the U.S. Commissioner of Education, Department of Health, Education, and Welfare or his delegate.

(j) "Stipend" means the payments made to a Fellow in accordance with section 404(a) of the Act (1) for each academic year of his study in an approved program and (2) on account of each of his dependents.

(k) "Academic year" consists of not less than two semesters or three quarters, beginning in the fall of the year, and falling within a single twelve month period.

§ 145.2 Summary of program.

(a) Purpose. The National Defense Graduate Fellowship Program has the objectives of increasing the facilities available for the graduate training of college or university level teachers, of promoting a wider geographical distribution of such facilities throughout the United States, and of assisting persons interested in teaching in institutions of higher education to obtain the Ph. D. or similar degree.

(b) Fellowship awards. The Commissioner is authorized to award up to one thousand Fellowships during the fiscal year ending June 30, 1959, and fifteen hundred Fellowships during each of the three succeeding fiscal years. A Fellowship will usually be awarded for three academic years, but in any case will not be for more than three academic years.

(c) Payments to fellows and institutions of higher education. Stipends to Fellows will be paid in accordance with § 145.7. In addition, to the extent permitted by § 145.4, the Commissioner shall make payments to institutions to cover that portion of the cost of an approved graduate program which is reasonably attributable to each Fellow.

(d) Approval of programs and allotment of fellowships. The Commissioner will approve graduate programs at institutions in accordance with § 145.3, and will determine the number of fellowships to be allotted to each such program. Public announcement will be made listing the approved programs and the institutions at which they are to be offered. An individual desiring a Fellowship should apply for acceptance as described in § 145.6 at the institution of his choice from among those listed.

§ 145.3 Approval of graduate programs. (a) Minimum requirements for approval of programs. The programs to be approved will be selected from those:

(1) For the completion of which a Ph. D. or similar degree is awarded;

(2) Which constitute a new or expanded program of graduate study;

(3) Which substantially further the objective of increasing the facilities available in the Nation for the graduate training of college or university level teachers;

(4) Which promote a wider geographical distribution of facilities for the graduate training of college or university level teachers throughout the Nation; and

(5) In which a preference in the aceeptance of persons for study is given to persons interested in teaching in institutions of higher education.

(b) Applications. Approval of graduate programs shall be on the basis of applications submitted by institutions of higher education in accordance with procedures established by the Commissioner. Applications shall contain information as to the proposed increase in facilities and/or faculty for the establishment of the new program or expansion of an existing program and shall indicate the total increase in enrollment (or total enrollment in the case of a new program) which the increase in facilities and/or faculty will enable the program to accommodate. The proposed development of the program should normally be such as to make possible the admission of sufficient first-year students each year to achieve the total anticipated increase in enrollment (or total anticipated enrollment in the case of a new program) within three years.

(c) Organization of programs. Programs may be organized by an institution in any manner appropriate to the field of study of the program, including but not restricted to: departmental, e.g., Political Science; a special field within a department, e.g. Political Theory; interdepartmental, e.g. Psychology and Politics; or intercollege, e.g. Law and Politics.

sponsorship.

(d) Joint institutional Two or more institutions may jointly submit a program for approval. The application must be signed by an authorized representative of each institution, and it must be agreed that credits earned at each of the institutions are fully transferable to the other.

(e) Dates for applying. Each year a date will be announced for the submission of applications by institutions for the approval of a new or expanded program to accommodate those who will be awarded Fellowships in the ensuing period. Institutions of higher education may secure forms for application from Division of Higher Education, Office of Education, Department of Health, Education, and Welfare, Washington 25, D.C.

(f) Criteria for the selection of approved programs. The following criteria will be considered in determining which of the programs meeting the foregoing requirements are to be approved:

(1) The prospective ability of the applying institution, in terms of faculty, libraries, and equipment, competently to offer the program;

(2) Current or prospective national or regional shortage of college or university teachers in the proposed field;

(3) Current or prospective national or regional inadequacies in the offering of proposed subjects;

(4) Adequate ratio, at the applying institution, between the number of graduate faculty and the proposed number of graduate students;

(5) The amount and extent of the applying institution's previous planning and development in the field proposed in the program;

(6) Likelihood that the applying institution will be able soundly to support the proposed program on a long-term basis;

(7) Likelihood that the proposed program will produce teachers for institutions of higher education.

(g) Notification of Commissioner's action. The Commissioner will notify each institution of higher education which has applied for approval of a graduate program whether such approval has been given, and if so, the number of Fellowships which the Commissioner is prepared to allot for such program.

(h) Effect of approval. Approval of a program is effective during any period in which a Fellowship holder is enrolled in the program, unless approval is withdrawn, as provided in paragraph (j) of this section. Continued approval of a program does not necessarily mean, however, that new Fellowships will be awarded to students enrolling in the program in any given year.

(1) Number of fellowships to be allotted. In determining the number of Fellowships to be allotted to an Approved