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higher education may treat as direct § 173.30 Disposition of equipment. costs:

(a) The Federal share of the cost of (1) Personnel costs, both professional

any single item of equipment initially and clerical, regular staff and consult

costing $100 or more in which the Federal ants, including all amounts deducted,

Government has participated (whether withheld, or contributed to retirement,

acquired with funds derived from Fedhealth, or other welfare benefit funds

eral grants or from matching funds) maintained for employees of the partici

which ceases to be used in the community pating institutions;

service program, or in connection with (ii) Material costs, where materials

the administration of the plan under are directly consumed or expended in

which it was purchased, or is on hand on carrying out the program, including the

the termination date of the community cost of supplies, mailing, and printing;

service program for which it was pur(iii) Travel expenses of institutional

chased or the program described in this personnel and consultants, in accordance

part, shall be accounted for by one of with institutional regulations or policies;

the following methods: and

(1) Similar program usage. An item (lv) Rental of, or, where economically

may be used, without adjustment of acjustified, purchase of specialized program

counts, in any other community service équipment which is not otherwise avail

program (whether or not receiving able at the institution. (2) Indirect costs. A participating

financial assistance under this program)

provided, however, that during such use institution may treat as indirect costs an amount which is computed on the basis

no charge for depreciation, amortization

or other use shall be made against any of the principles for indirect cost determination set forth in Bureau of the

existing or future Federal grant or con

tract. An item may be sold and the Budget Circular A-21 as amended.

Federal share of the net proceeds of sale § 173.28 Fiscal audits.

credited to the institution's or State

agency's account for program use. The Department will audit the records

(2) Nonprogram usage or disposition; relating to the expenditures by the State crediting of proceeds or value. (D) 1. agency in order to determine whether during the period of its useful life, an the State agency has properly accounted item is sold or transferred for other than for Federal funds. The state agency program use, or, if used or disposed of in shall be responsible for the audit of any other manner, the Federal share of funds expended by the institutions of

the proceeds or of the fair market value higher education participating in the

on the (a) date of sale, (b) date on which

the item ceased to be used in the proprogram.

gram, or (c) date of program termina§ 173.29 Retention of records.

tion, whichever first occurs, shall be

credited to or paid to the United States. (a) General rule. The state agency (it) The Commissioner, however, in his shall provide for keeping accessible and

discretion, may waive credit or payment intact all records supporting claims for to the United States where equipment Federal grants, or relating to the ac- remains on termination of the program countability of the State agency or par- described in this part. ticipating institution of higher education (Ili) To the extent an item purchased for expenditure of such grants or to the from grant funds has been used for credit expenditure of matching funds, until the or "trade-in” on the purchase of new State agency is notified that such records

Items of equipment, the accounting obliare not needed for program administra

gation shall apply to the same extent to

such new items. tion review or of the completion of the

(b) Inventories and records are reDepartment's fiscal audit, whichever first

quired to be kept for all items of equipoccurs.

ment, initially costing $100 or more in (b) Questioned expenditure. The rec

which the Federal Government has parords involved in any claim or expendi- ticipated (whether acquired with funds ture which has been questioned shall be derived from Federal grants or from maintained until necessary adjustments matching funds). The State educahave been reviewed and cleared by the tional agency shall maintain records Department."

suficient for a determination as to whether the use of such equipment con- ments to reflect refunds, credits, undertinues to be for a purpose provided for payments, or overpayments, as well as under Title I of the Act, or, if not, records any adjustments resulting from Federal showing its disposition.

or State administrative reviews and

audits. Such adjustments shall be set Subpart Payment Procedures

forth in the State's financial reports § 173.31 Federal payment to a State.

filed with the Commissioner. (a) Payments to a State under this § 173.34 Reallotment. part may be made directly to the State

(a) In order to provide a basis for reagency, or, upon special request of a

allotment by the Commissioner pursuant State agency, to one or more participat

to section 103(b) of the Act, each State ing Institutions of higher education. (b) Payments will be made only after

agency will submit, upon request of the

Commissioner by such date(s) as the approval of the State plan and any required annual amendments thereto, and

Commissioner may specify, a statement receipt of the certification required un

showing all estimated anticipated needs der 173.22. Payments may be made in

during the remainder of the current fiscal equal or graduated installments either year for carrying out the State plan. in advance or by way of relmbursement The statement will contain estimates on the basis of estimates contained in the based on the estimated costs of completState plan or amendments thereto, and ing community service programs already any other reports required to be sub

approved without expansion or other mitted under section 105(a) (6) of the

modification as well as the costs of exAct or $ 173.20. Necessary adjustments will be made at the time of each payment

panding or modifying already approved on account of overpayments or under

community service programs and appayments for any prior period. Atten

proving new community service programs tion is directed to $$173.32 and 173.36.

which will further carry out and develop

the objectives of the plan. The Commis§ 173.32 Continuing authorization of

sioner may also request any additional payment.

information on such reports as he de(a) Until the State agency is notified sires for the purpose of making reallotby the Commissioner that (1) a redeter- ment. mination has been made of the amount (b) Subsequent to the review of the to which a State is eligible or (2) a find

above described required reports and ing has been made pursuant to section

prior to the date fixed by the Commis107(b) of the Act and § 173.6 that the

sioner for reallotment of funds, the ComState is no longer eligible to participate

missioner will notify each State agency in this program, the Commissioner shall be deemed to have given implied author

affected by reallotment of his determinaization of further payments under this

tion respecting the State's allotment. part.

The Commissioner shall thereafter either (b) Neither the approval of the State modify the amount authorized for payplan, the issuance of a Letter of Credit, ment to the State or if an overpayment the approval of withdrawals thereunder, has already been made, direct the State nor the making of any direct payments to return to the Commissioner whatever to the State or participating institutions amount the Commissioner determines shall be deemed to waive the right or duty

the State does not require. of the Commissioner to withhold funds by reason of the failure of the State to & 173.35 Interstate transfer of allotobserve any Federal requirements set ments. out in the Act or regulations related

Where two or more States agree that thereto or any other relevant Federal Act or Order, either before or after

a portion of the Federal allotment of one such administrative action respecting

State be added to and combined with payment.

that of the other State, there shall be

submitted to the Commissioner, as part $ 173.33 Adjustments.

of both State plans or as amendments The State agency in its maintenance thereto, the following information: of accounts, records, and reports shall (a) A request that a specified amount make promptly any necessary adjust- of one State's allotment be transferred

to the other State for purposes described therein;

(b) A description of the community service program(s) for which the funds will be used by the recipient State;

(c) A statement of the total amount to be expended for such program(s) and the amount of the non-Federal share thereof;

(d) A statement indicating how the requirement for matching funds and/or maintenance of effort will be assumed by either or both institutions;

(e) A statement showing how such program(s) will assist in the solution of community problems of concern to both participating States; and

(f) A certified statement from the recipient State agency that it will use the funds for the purposes identified by the State requesting such transfer. § 173.36 Interest on Federal funds.

In the event that any interest is earned on Federal funds, it shall be credited to the United States. The State agency shall submit as a part of each annual financial report a statement showing the amount of interest earned on Federal funds during that fiscal year. Such interest earnings will be considered in the adjustment of the next payment due. Where, however, an institution or State will not participate in the program during a subsequent period, such interest shall be refunded to the Commissioner. § 173.37 Termination of program.

Where any State desires not to participate in this program during a subsequent year, or upon termination of the program described in this part, the State shall refund to the Commissioner any overpayments which have been made either to the State agency or to a participating institution.

Subpart B-Interest Benefits—State and Private

Nonprofit Student Loan Insurance Programs

and Direct State Loan Programs Sec. 177.11 In general. 177.12 Agreements for Federal payments to

reduce student interest costs for

insured loans. 177.13 Interim coverage for insured loan

programs. 177.14 Federal payments to reduce student

interest costs on direct State loans. 177.15 Amount of interest benefits and pro

cedures for payment. 177.16 Effective dates. Subpart (Advances for Reserve Funds of State

and Private Nonprofit Loan Insurance Programs 177.21 In general. 177.22 Applications. 177.23 Allocation and payment of State's

allotment. 177.24 Terms and Conditions of Advance.

Subpart D(Reserved) AUTHORITY: The provisions of this Part 177 issued under sec. 421-435; 79 Stat. 12361249; 20 U.S.C. 1071-1085.

SOURCE: The provisions of this Part 177 appear at 31 F.R. 6109, Apr. 21, 1966, unless otherwise noted.

Subpart A-General Provisions $ 177.1 Definitions.

As used in this part:

(a) "Act" means Title IV, Part B of the Higher Education Act of 1965 (P.L. 89-329).

(b) References to sections are to sections of this part, unless otherwise indicated.

(c) "Academic year or its equivalent," for purposes of determining the amount of loan insurance authorized pursuant to § 177.12(a) (1) (i) and (ii), means the number of credit hours which a student must acquire during any one school year in order to secure the degree or certificate toward which he is working in the number of semesters or terms normally taken therefor at the institution where he is pursuing a course of study. Generally, the total number of credits required for a degree or certificate when divided by the number of academic years normally required to obtain the degree or certificate will provide the number of credits which may be considered an equivalent academic year.

(d) “Commissioner" means the U.S. Commissioner of Education or his designee.

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Definitions.
Student eligibility for interest bene.

fits. Adjusted family income.

177.3

(e) "Eligible institution" or "institution" means an educational institution in any State which (1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such certific (2) is legally authorized within such State to provide a program of education beyond secondary education, (3) provides an educational program for which it awards a bachelor's degree or provides not less than a 2-year program which is acceptable for full credit toward such a degree, (4) is a public or other nonprofit institution, and (5) is accredited by a nationally recognized accrediting agency or association approved by the Commissioner for this purpose, or, if not so accredited, (i) is an institution with respect to which the Commissioner has determined that there is satisfactory assurance, considering the resources available to the institution, the period of time, if any, during which it has operated, the effort it is making to meet accreditation standards, and the purpose for which this determination is being made, that the institution will meet the accreditation standards of such an agency or association within a reasonable time, or (ii) 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. Such term also includes any public or other nonprofit collegiate or associate degree school of nursing, and any school which provides not less than a l-year program of training to prepare students for gainful employment in a recognized occupation and which meets the provisions of subparagraphs (1), (2), (4), and (5) of this paragraph. If the Commissioner determines that a particular category of such schools does not meet the requirements of subparagraph (5) of this paragraph because there is no nationally recognized accrediting agency or association qualified to accredit schools in such category, he shall, pending the establishment of such an accrediting agency or association, appoint a committee, composed of persons specially qualified to evaluate training provided by schools in such category, which shall (a) prescribe the standards of content, scope, and quality which must be met in order to qualify schools in such

category to participate in the program pursuant to this part, and (b) determine whether particular schools not meeting the requirements of subparagraph (5) of this paragraph meet those standards. For purposes of this paragraph, the Commissioner shall publish a list of nationally recognized accrediting agencies or associations which he determines to be reliable authority as to the quality of training offered.

(f) "Collegiate school of nursing” means a department, division, or other administrative unit in a college or university which provides primarily or exclusively an accredited program of education in professional nursing and allied subjects leading to the degree of bachelor of arts, bachelor of science, bachelor of nursing, or to an equivalent degree, or to a graduate degree of nursing,

(g) “Associate degree school of nursing” means a department, division, or other administrative unit in a junior col. lege, community college, college, or uni. versity which provides primarily or exclusively an accredited 2-year program of education in professional nursing and allied subjects leading to an associate degree in nursing or to an equivalent degree.

(h) "Accredited" when applied to any program of nursing education means a program accredited by a recognized body or bodies approved for such purpose by the Commissioner.

(i) "Eligible lender" means an eligible institution as defined in paragraph (e) of this section, an agency or instrumentality of a State, or a financial or credit institution (including banks, credit unions and insurance companies) which is subject to examination and supervision by an agency of the United States or any State.

(j) “Nonprofit" as applied to an agency, organization, or institution means an agency, organization, or 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.

(k) “Full-time student” means a student who is enrolled in, and is carrying a sufficient number of credit hours or their equivalent to secure the degree or certificate toward which he is working in no more than the number of semesters

or terms normally taken therefor at the the lender a statement in such form as institution in which he is enrolled. This the Commissioner may prescribe, which term includes any student who is pur- shall include: suing any combination of courses, re- (1) A certification by an eligible insearch or special studies (whether or not stitution that he is enrolled at the infor credit) which the institution con- stitution or has been accepted for ensiders full-time study.

rollment; (1) "Half-time student” means a stu

(2) An assurance by the student that dent who is carrying at least one-half the loan on which interest payments are the normal full-time academic workload to be made has not been and will not be as determined by the institution in which used for any purpose other than for the he is enrolled.

costs of education for the academic year (m) "Guarantee agency" means the covered by the application; State agency or private nonprofit insti- (3) Information necessary to detertution or organization administering a

mine, pursuant to § 177.3, whether his student loan insurance program.

adjusted family income is less than (n) "Holder” means only an eligible

$15,000; and lender or an assignee who meets the

(4) Information concerning other qualifications of an eligible lender but

loans made to him which are covered in no event includes the guarantee

under this part or 45 CFR Part 178. agency with respect to loans insured by

(c) The lender, acting in good faith, it.

may in the absence of information to the (0) "Default" means the failure to

contrary rely upon statements submitted make an installment payment when due, by the borrower and his family pursuant or to comply with other terms of the

to paragraph (b) of this section. note or other written evidence of agree

131 F.R. 6109, Apr. 21, 1966, as amended at ment, which persists (e.g., is not cured

31 F.R. 14836, Nov. 23, 1966) either by payment or other appropriate arrangements) in the case of a loan re

§ 177.3 Adjusted family income. payable in monthly installments for 120 (a) Computation. In general, adjusted days, or in the case of a loan repayable family income will be computed by addin less frequent installments for 180 days. ing 90 percent of the adjusted gross

(p) “State student loan insurance incomes (as defined in sec. 62 of the Inprogram" means a program under which ternal Revenue Code, or in the case of a State agency is authorized to insure residents of Puerto Rico, as defined in loans, and to enter into agreements with sec. 22(n) of the Commonwealth Tax the Commissioner, and which extends to Act of 1954) of the student borrower, his one or more categories of students who spouse, and his parents for the tax year are residents of the State.

immediately preceding the execution of

the note or written agreement evidencing § 177.2 Student eligibility for interest benefits.

the loan, and deducting from such sum

an amount equal to the amount allow(a) A student (1) who has received a

able on account of exemptions for such loan from an eligible lender under a stu

individuals for such year (pursuant to dent loan insurance program meeting the sec. 151 of the Internal Revenue Code or, requirements of § 177.12 or g 177.13, un- in the case of residents of Puerto Rico, der a direct State student loan program pursuant to sec. 25 of the Commonmeeting the requirements of $ 177.14, or wealth Tax Act of 1954). under the Federal loan insurance pro- (b) Computation of income from forgram, (2) who is enrolled or has been ac

eign sources. In cases where any of the cepted for enrollment as at least a half

income of the borrower, his spouse or his time student in an eligible institution, parents is not subject to taxation under (3) whose adjusted family income is less the Internal Revenue Code or the Comthan $15,000, and (4) who is a national monwealth Tax Act of 1954 due to the of the United States or is in the United fact that such individual is (1) residing States for other than a temporary pur- abroad, or (2) a nonresident alien, such pose and intends to become a permanent income shall be included in the borresident thereof, is eligible for payment rower's adjusted family income. Income on his behalf of a portion of the Interest described in clause (1) shall be treated determined under $ 177.15(a).

as if subject to taxation under the In(b) To have interest payments made ternal Revenue Code and computed (toon his behalf, a student shall submit to gether with any income which is subject

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