[Federal Register Volume 77, Number 85 (Wednesday, May 2, 2012)]
[Rules and Regulations]
[Pages 25893-25901]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-10559]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF EDUCATION

34 CFR Part 690

[Docket ID ED-2012-OPE-0006]
RIN 1840-AD11


Federal Pell Grant Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Interim final rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: The Secretary amends four sections of the Federal Pell Grant 
Program regulations to make them consistent with recent changes in the 
law that prohibit a student from receiving two consecutive Pell Grants 
in a single award year.

DATES: This interim final rule is effective May 2, 2012. We must 
receive your comments on or before June 18, 2012.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via U.S. mail, commercial delivery, or hand delivery. We will not 
accept comments by fax or by email. Please submit your comments only 
once 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 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.''
     U.S. Mail, Commercial Delivery, or Hand Delivery: If you 
mail or deliver your comments about these interim final regulations, 
address them to Jacquelyn Butler, U.S. Department of Education, 1990 K 
Street NW., Room 8053, Washington, DC 20006-8542.
    Privacy Note: The Department's policy is to make all comments 
received from members of the public available for public viewing in 
their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should be careful to include 
in their comments only information that they wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: Jacquelyn Butler, U.S. Department of 
Education, 1990 K Street NW., Room 8053, Washington, DC 20006-8542. 
Telephone: (202) 502-7890 or via Internet at: Jacquelyn.Butler@ed.gov.
    If you use a telecommunications device for the deaf (TDD), call the 
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
    Individuals with disabilities can obtain this document in an 
accessible format (e.g., braille, large print, audiotape, or compact 
disc) on request to the contact person listed in this section.

SUPPLEMENTARY INFORMATION: 

Invitation To Comment

    Although the Secretary has decided to issue these interim final 
regulations without first publishing proposed regulations for public 
comment, we are interested in whether you think we should make any 
changes in these regulations. We invite your comments. We will consider 
these comments in determining whether to revise these interim final 
regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866 and 13563 and their overall 
requirement of reducing regulatory burden that might result from these 
interim final regulations. Please let us know of any further ways we 
could reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the Federal 
Pell Grant Program.
    During and after the comment period, you may inspect all public 
comments about these interim final regulations by accessing 
www.regulations.gov. You may also inspect the comments in person in 
Room 8083, 1990 K Street NW., Washington, DC, between 8:30 a.m. and 4 
p.m. Washington, DC time, Monday through Friday of each week, except 
Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request, we will provide an appropriate accommodation or 
auxiliary aid to an individual with a disability who needs assistance 
to review the comments or other documents in the public rulemaking 
record for these interim final regulations. If you want to schedule an 
appointment for this type of accommodation or auxiliary aid, please 
contact the person listed under FOR FURTHER INFORMATION CONTACT.

Background

Two Federal Pell Grants in One Award Year (Sec. Sec.  690.63(g)(1), 
690.63(h), 690.64, 690.65(c), 690.65(f), and 690.67)

    In August of 2008, the Higher Education Opportunity Act (HEOA), 
Public Law 110-315, added section 401(b)(5) to the Higher Education Act 
of 1965, as amended (HEA), which provided that a student enrolled in a 
certificate, associate degree, or baccalaureate degree program at least 
half-time for more than one academic year may receive up to two 
consecutive Federal Pell Grant Scheduled Awards during a single award 
year. Although the addition of section 401(b)(5) was effective 
beginning with the 2009-2010 award year, we did not publish final

[[Page 25894]]

regulations until October 29, 2009 (74 FR 55902). Those regulations 
were effective beginning with the 2010-2011 award year. Prior to the 
publication of the October 29, 2009, final regulations, we provided 
guidance to institutions on how to implement the provisions of section 
401(b)(5) to allow certain students to receive two Pell Grants in one 
award year for the 2009-2010 award year.
    Subsequently, section 1860(a)(2) of division B of the Department of 
Defense and Full-Year Continuing Appropriations Act, 2011 (Pub. L. 112-
10) repealed section 401(b)(5) of the HEA. The repeal of this provision 
became effective with the 2011-2012 award year.
    Because there is no longer an opportunity for a student to receive 
a second Federal Pell Grant Scheduled Award, we are amending current 
Sec. Sec.  690.63(g)(1), 690.63(h), 690.64, 690.65(c), 690.65(f), and 
690.67.
Significant Regulations
    We discuss substantive issues under the sections of the regulations 
to which they pertain. Generally, we do not address regulatory 
provisions that are technical or otherwise minor in effect.

Part 690--Federal Pell Grant Program

    Two Federal Pell Grants in an Award Year (Sec. Sec.  690.63(g)(1), 
690.63(h), 690.64, 690.65(c), 690.65(f), and 690.67)
    Statute: Section 401(b)(5) of the HEA, as amended by the HEOA, 
provided that a student may receive up to two consecutive Federal Pell 
Grant Scheduled Awards during a single award year if the student is 
enrolled at least half-time for more than one academic year, more than 
two semesters, or the equivalent time during a single award year. The 
student must also be enrolled in a certificate, associate degree, or 
baccalaureate degree program. Section 484(s)(3) of the HEA provides the 
authority to waive this provision for students with intellectual 
disabilities who enroll in a comprehensive transition and postsecondary 
program. Section 1860(a)(2) of division B of the Department of Defense 
and Full-Year Continuing Appropriations Act, 2011 (Pub. L. 112-10) 
repealed section 401(b)(5) of the HEA.

Calculation of a Federal Pell Grant for a Payment Period (Sec.  
690.63(g)(1))

    Current Regulations: Current Sec.  690.63(g)(1) provides that the 
amount of a student's award for the award year may not exceed his or 
her Scheduled Federal Pell Grant award for the award year unless the 
student is eligible to receive a second Scheduled Federal Pell Grant 
award in the same award year under current Sec.  690.67.
    New Regulations: We are revising current Sec.  690.63(g)(1) to 
remove the reference to Sec.  690.67.
    Reasons: With the repeal of section 401(b)(5) of the HEA, it is no 
longer necessary to have procedures for awarding a student his or her 
second Scheduled Award in an award year. Therefore, these interim final 
regulations remove Sec.  690.67, and we remove the unnecessary 
reference to Sec.  690.67 from current Sec.  690.63(g)(1).

Payment From Two Scheduled Awards (Sec.  690.63(h))

    Current Regulations: Under current Sec.  690.63(h), if a student is 
eligible for the remaining portion of a first Scheduled Award in an 
award year and for a payment from the second Scheduled Award, the 
student's payment is calculated using the annual award for his or her 
enrollment status for the payment period. The student's payment is the 
remaining amount of the first Scheduled Award being completed plus an 
amount from the second Scheduled Award in the award year up to the 
total amount of the payment for the payment period.
    New Regulations: Current Sec.  690.63(h) is removed.
    Reasons: With the repeal of section 401(b)(5) of the HEA, which 
provided that an otherwise eligible student could receive more than one 
Federal Pell Grant in an award year, it is no longer necessary to 
provide regulations that calculate a student's Federal Pell Grant 
payment when the student is eligible to receive a payment from his or 
her first and second Scheduled Awards in a payment period. Therefore, 
we are removing current Sec.  690.63(h).

Payment Period in Two Award Years (Sec.  690.64)

    Current Regulations: Under current Sec.  690.64, if a payment 
period is scheduled to occur in two award years, an institution must 
consider this ``crossover'' payment period to occur entirely in one 
award year and pay the student with funds from the award year to which 
the payment period is assigned. An institution must assign the payment 
period to that award year in which the student would receive the 
greater payment for the payment period based on the information 
available at the time that the student's Federal Pell Grant is 
initially calculated. If the institution subsequently receives 
information that the student would receive a greater payment for the 
payment period by reassigning the payment to the other award year, the 
institution is required to reassign the payment to the award year 
providing the greater payment.
    New Regulations: Under new Sec.  690.64(a) and (a)(1) of these 
interim final regulations, if a student enrolls in a payment period 
that is scheduled to occur in two award years, the entire payment 
period must be considered to occur within one award year.
    New Sec.  690.64(a)(2) provides that the institution must determine 
for each Federal Pell Grant recipient the award year in which the 
payment period will be placed.
    New Sec.  690.64(a)(3) and (4) require an institution to pay a 
student with funds from the same award year to which the payment period 
was assigned.
    New Sec.  690.64(b) provides that an institution may not make a 
payment that will result in the student receiving more than his or her 
Scheduled Federal Pell Grant for an award year.
    Reasons: These interim final regulations amend Sec.  690.64 to 
conform to the change in the law that repealed section 401(b)(5) of the 
HEA.
    We have retained most of current Sec.  690.64 with the exception of 
Sec.  690.64(b) which requires an institution to assign a crossover 
payment period to the award year in which the student receives the 
greater Federal Pell Grant award. The purpose of current Sec.  
690.64(b) was to maximize the student's eligibility over the two award 
years in which the payment period was scheduled to occur in 
anticipation of a student receiving a second Federal Pell Grant 
Scheduled Award. Since a student may not receive a second Federal Pell 
Grant Scheduled Award, it is no longer necessary to require that the 
student's award for the payment period be based on the higher Federal 
Pell Grant payment. Therefore we are removing current Sec.  690.64(b). 
Instead, under new Sec.  690.64(a)(2), institutions have the ability to 
assign a crossover payment period in a way that meets the need of its 
students and maximizes a student's eligibility over the two award years 
in which the crossover payment period may occur. New Sec.  690.64(b) is 
necessary to clarify that an institution may not make a payment that 
will result in the student receiving more than his or her Scheduled 
Federal Pell Grant for an award year.

Transfer Student: Attendance at More Than One Institution During an 
Award Year (Sec.  690.65(c) and (f))

    Current Regulations: Current Sec.  690.65(c) provides that a 
student who receives a Federal Pell Grant at one institution and 
subsequently enrolls at a

[[Page 25895]]

second institution within the same award year may only be paid at the 
second institution for the period of time the student is enrolled at 
that institution. The institution must adjust the student's grant to 
ensure that funds received by the student for the award year do not 
exceed the student's Scheduled Federal Pell Grant for that award year, 
unless the student is eligible for a second Scheduled Federal Pell 
Grant during that same award year.
    Current Sec.  690.65(f) provides that a transfer student must repay 
any amount received in an award year that exceeds his or her first or 
second Scheduled Federal Pell Grant.
    New Regulations: We are revising current Sec.  690.65(c) and (f) to 
remove the references to Sec.  690.67.
    Reasons: With the removal of Sec.  690.67 by these interim final 
regulations in accordance with the repeal of section 401(b)(5) of the 
HEA, it is no longer necessary to provide regulations that establish 
procedures for awarding a student his or her second Scheduled Award in 
an award year. Therefore the references to Sec.  690.67 are removed 
from current Sec.  690.65(c) and (f).

Receiving Up to Two Scheduled Awards During a Single Award Year (Sec.  
690.67)

    Current Regulations: Current Sec.  690.67(a) provides that an 
institution participating in the Federal Pell Grant Program shall award 
a payment of a second Scheduled Award to a student in an award year if 
an otherwise eligible student is enrolled for credit or clock hours 
that are attributable to the student's second academic year in the 
award year.
    Current Sec.  690.67(b) provides the methods by which an 
institution must determine the credit or clock hours that a transfer 
student has earned at other institutions during the award year.
    Current Sec.  690.67(c) provides that a financial aid administrator 
may waive the requirement that a student complete the credit or clock 
hours in the student's first academic year in the award year if the 
administrator determines that the student was unable to complete those 
clock or credit hours due to circumstances beyond the student's 
control. In this situation, the financial aid administrator is required 
to make and document the determination on an individual basis.
    Current Sec.  690.67(d) provides that in determining a student's 
eligibility for a second Scheduled Award in an award year, an 
institution may not use credit or clock hours that the student received 
based on Advanced Placement (AP) programs, International Baccalaureate 
(IB) programs, testing out, life experience, or similar competency 
measures.
    New Regulations: Current Sec.  690.67 is removed.
    Reasons: With the repeal of section 401(b)(5) of the HEA, which 
provided that an otherwise eligible student could receive more than one 
Federal Pell Grant in an award year, it is no longer necessary to 
provide regulations that establish procedures for awarding a student 
his or her second Scheduled Award in an award year. Therefore, we are 
removing current Sec.  690.67.

Executive Orders 12866 and 13563

Regulatory Impact Analysis
    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and, therefore, subject to 
the requirements of the Executive order and subject to review by the 
Office of Management and Budget (OMB). Section 3(f) of Executive Order 
12866 defines a ``significant regulatory action'' as an action likely 
to result in a rule that may--
    1. Have an annual effect on the economy of $100 million or more, or 
adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    2. Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    3. Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    4. Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive Order.
    The statutory elimination of the two Pell Grant option as reflected 
in this regulatory action is economically significant subject to review 
by OMB under section 3(f)(1) of Executive Order 12866.
    We have also reviewed these regulations under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    1. Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    2. Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things, and to the extent practicable--the costs 
of cumulative regulations;
    3. In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    4. To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    5. Identify and assess available alternatives to direct regulation, 
including economic incentives--such as user fees or marketable 
permits--to encourage the desired behavior, or provide information that 
enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing these regulations only on a reasoned determination 
that their benefits justify their costs. In choosing among alternative 
regulatory approaches, we selected those approaches that maximize net 
benefits. Based on the analysis that follows, the Department believes 
that these regulations are consistent with the principles in Executive 
Order 13563.
    We also have determined that this regulatory action would not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    In accordance with the Executive orders, the Department has 
assessed the potential costs and benefits of this regulatory action. 
The potential costs associated with this regulatory action are those 
resulting from statutory requirements and those we have determined as 
necessary for administering this program effectively and efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of this regulatory action, we have determined that the 
benefits justify the costs.

1. Summary of Potential Costs and Benefits

    These interim final regulations remove the regulatory provisions 
related

[[Page 25896]]

to the option of receiving two Pell Grants in one year, an option that 
was eliminated by section 1860(a)(2) of division B of the Department of 
Defense and Full-Year Continuing Appropriations Act, 2011. This option 
was originally authorized by the HEOA and was first available in the 
2009-2010 award year. These interim final regulations generally restore 
the long-standing policy related to the timing and availability of Pell 
Grants within an award year as it existed before the 2009-2010 award 
year. In the following sections, the Department summarizes the effects 
these interim final regulations are likely to have on the Federal 
student aid programs, institutions of higher education, and students.
    Federal Government: Because Pell Grants are an entitlement to 
eligible recipients, any changes to the program that reduce eligibility 
will result in reduced costs of the Pell Grant Program. According to 
the Department's estimates, the elimination of the option for two Pell 
Grants in one year will remove the eligibility of about 1.9 million 
students annually and reduce costs in the program by approximately 
$24.3 billion over five years. When discounted at a 3 percent rate and 
a 7 percent rate, this reduces costs in the Pell Grant Program over 5 
years by $22.2 billion and $19.7 billion, respectively. These reduced 
costs were attributed to the passage of the Department of Defense and 
Full-Year Continuing Appropriations Act, 2011, and these interim final 
regulations make the regulatory changes to give effect to the statute 
but do not generate any further cost reductions.
    Institutions: The effect of the statutory change reflected in these 
interim final regulations on institutions will depend on the extent to 
which the availability of two Pell Grants in one year induced students 
to pursue additional credits. The availability of two Pell Grants in 
one award year was meant to accelerate students' academic programs and 
hopefully lead to more completions in a timely period. If this occurred 
and students who received two Pell Grants were induced to take more 
courses and progress further in their academic pursuits, the 
institutions will lose some tuition and fee revenue from the statutory 
change related to these interim final regulations. To the extent 
students took classes they otherwise would have taken anyway, the 
availability of two Pell Grants just substituted one source of tuition 
and fee revenue for another and may have shifted the timing of when the 
institutions received those funds. The limited time the two Pell Grants 
option was available, however, makes it difficult to determine the 
extent to which revenues will be reduced or shifted to other sources. 
As shown in Table 1, approximately 10 percent of Pell Grant recipients 
received a second Pell Grant in Award Year (AY) 2009-2010, and that was 
expected to increase to 20 percent by AY 2012-2013. Given projected use 
of the two Pell Grants option, the estimated maximum revenue loss to 
institutions would be approximately $24.3 billion over 5 years from AY 
2011-2012 to AY 2015-2016. However, as stated earlier in this 
discussion, it is likely that a significant portion of this revenue 
would be shifted to other sources or be captured over a different time 
period, so the cost to institutions from the statutory changes should 
be much less. The institutions' potential loss of revenue related to 
the elimination of the two Pell option will depend on tuition 
reductions institutions choose to grant and the students' response in 
finding alternative sources of funding or reducing credits taken. The 
exact effect on institutions cannot be quantified, but it is likely to 
be substantially lower than the $24.3 billion discussed above.
[GRAPHIC] [TIFF OMITTED] TR02MY12.008

    Students: The effect of the statutory change reflected in these 
interim final regulations on students is the loss of grant aid and 
potential academic delay or decreased likelihood of completion. 
Students will have to replace the reduced grant aid with savings, 
earnings, increased debt, or tuition reductions granted by 
institutions. By AY 2012-2013 approximately 20 percent of Pell Grant 
recipients were expected to receive two Pell Grants in one year, and 
they could lose grant aid up to the Pell Grant maximum depending on 
their eligibility and anticipated credits. The mandatory money 
available from this statutory change was directed to the Pell Grant 
Program to maintain the maximum grant, to the benefit of all Pell Grant 
recipients. According to the Department's estimates, approximately $5 
billion in grant aid to almost 2 million students annually would need 
to be made up through other sources. It is not clear if the option for 
a second Pell Grant in one year had a significant effect on completion 
rates, but this is another possible cost to some student recipients of 
a second Pell Grant.
    The Department welcomes comments about the costs and benefits of 
the changes implemented in these interim final regulations.
Accounting Statement
    As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in the 
following table we have prepared an accounting statement showing the 
classification of the expenditures associated with the provisions of 
these interim final regulations. This table provides our best estimate 
of the changes in annual

[[Page 25897]]

monetized transfers as a result of the statutory elimination of the two 
Pell Grant option as reflected in these interim final regulations. 
Expenditures are classified as transfers from recipients of a second 
Pell Grant to the Federal Government.

      Accounting Statement Classification of Estimated Expenditures
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $4,813 (7%).
                                            $4,838 (3%).
From Whom To Whom?                          From recipients of a second
                                             Pell Grant to the Federal
                                             Government.
------------------------------------------------------------------------

2. Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum on ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these regulations 
easier to understand, including answers to questions such as the 
following:
     Are the requirements in the regulations clearly stated?
     Do the regulations contain technical terms or other 
wording that interferes with their clarity?
     Does the format of the regulations (grouping and order of 
sections, use of headings, paragraphing, etc.) aid or reduce their 
clarity?
     Would the regulations be easier to understand if we 
divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec.  '' and a numbered heading; for example, 
Sec.  690.64.)
     Could the description of the regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the regulations easier to understand? If so, how?
     What else could we do to make the regulations easier to 
understand?
    Send any comments that concern how the Department could make these 
regulations easier to understand to the person listed in the ADDRESSES 
section of the preamble.

Waiver of Rulemaking and Delayed Effective Date

    Under the Administrative Procedure Act (APA) (5 U.S.C. 553) the 
Department generally offers interested parties the opportunity to 
comment on proposed regulations. However, the APA provides that an 
agency is not required to conduct notice and comment rulemaking when 
the agency for good cause finds that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest. 5 U.S.C. 553(b)(B).
    There is good cause here for waiving rulemaking under the APA. 
Notice and comment to amend current Sec.  690.64 is contrary to the 
public interest because, as discussed in more detail in the following 
paragraphs, delay in making this regulatory change will cause some 
students to lose some of their Pell Grant eligibility. Notice and 
comment to amend Sec. Sec.  690.63, 690.65, and 690.67 are unnecessary 
because we are merely updating these sections to reflect statutory 
changes in Public Law 112-10 that prohibit a student from receiving two 
Pell Grants in a single award year.
    The APA's rulemaking exception `` `Contrary to the public interest' 
requires that public rule-making procedures shall not prevent an agency 
from operating.'' Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1484 
n.2 (9th Cir. 1992), quoting Levesque v. Block, 723 F.2d 175, 184 (1st 
Cir. 1983), quoting S. Rep. No. 752, 79th Cong., 1st Sess. 14 (1945), 
reprinted in Senate Judiciary Committee, 79th Cong., 2d Sess., 
Administrative Procedure Act Legislative History 185, 200 (1946). It 
``connotes a situation in which the interest of the public would be 
defeated by any requirement of advance notice, as when announcement of 
a proposed rule would enable the sort of financial manipulation the 
rule sought to prevent.''
    Rulemaking is ``unnecessary'' when the agency is issuing a minor 
rule in which the public is not particularly interested. It applies in 
those situations in which ``the administrative rule is a routine 
determination, insignificant in nature and impact, and inconsequential 
to the industry and to the public.'' Utility Solid Waste Activities 
Group v. EPA, 236 F.3d 749, 755 (D.C. Cir. 2001), quoting U.S. 
Department of Justice, Attorney General's Manual on the Administrative 
Procedure Act 31 (1947) and South Carolina v. Block, 558 F. Supp. 1004, 
1016 (D.S.C. 1983).
    The statutory change to prohibit a student from receiving two Pell 
Grants in a single award year results in unintended adverse effects on 
students under current Sec.  690.64. Some students may lose Pell Grant 
eligibility under this provision. For example, under current Sec.  
690.64, in the summer of 2012, if a student had remaining eligibility 
from the 2011-2012 award year, he or she would not receive those funds. 
Instead, the student would receive funds under the 2012-2013 award year 
because the 2012-2013 Pell Grant would be greater. This would also 
reduce the amount of Pell Grant funds that would remain available to 
the student for the balance of the 2012-2013 award year.
    Assuming a student had $1,500 in remaining eligibility for the 
2011-2012 award year, the following table shows the student's 
eligibility under current Sec.  690.64 and under the changes made by 
these interim final regulations:

------------------------------------------------------------------------
                                                          Interim  final
                                           Current rule     regulations
------------------------------------------------------------------------
Award Year 2011-2012 Summer 2012........  ..............          $1,500
Award Year 2012-2013 Summer 2012........          $2,775  ..............
Fall 2012...............................           2,775           2,775
Spring 2013.............................  ..............           2,775
------------------------------------------------------------------------

    In this example, under the current regulations, a student would not 
receive an additional $1,500 of the remaining Pell Grant award and 
would exhaust eligibility by the Spring of 2013. These interim final 
regulations avoid this result. The student receives an additional 
$1,500 of his or her remaining eligible Pell Grant award and has not 
exhausted his or her eligibility by the Spring of 2013. It is precisely 
to avoid this harm to students that we are waiving rulemaking for the 
change to Sec.  690.64.
    With respect to Sec. Sec.  690.63, 690.65, and 690.67, because 
these interim final regulations merely reflect statutory changes and 
remove obsolete regulatory provisions, notice and comment are 
unnecessary. The amendments reflect the statutory change to the HEA 
that prohibits a student from receiving two Pell Grants in a single 
award year. Accordingly, the Secretary has good cause to waive 
rulemaking with respect to the removal of these regulatory provisions.

[[Page 25898]]

    The APA also generally requires that regulations be published at 
least 30 days before their effective date, unless the agency has good 
cause to implement its regulations sooner. (5 U.S.C. 553(d)(3)). 
Because these interim final regulations merely reflect statutory 
changes and remove obsolete regulatory provisions and, in the case of 
new Sec.  690.64, protect students from receiving reduced amounts of 
Pell Grant funds, there is good cause to make them effective on the day 
they are published.

Regulatory Flexibility Act Certification

Initial Regulatory Flexibility Analysis
    These interim final regulations affect institutions that 
participate in Title IV, HEA programs, and individual Pell Grant 
recipients. The effect of the elimination of two Pell Grants in one 
year will depend on the extent students replace the funds from other 
sources or change their academic plans, the distribution of recipients 
of a second Pell Grant, and the alternative use of the funds. This 
Initial Regulatory Flexibility Analysis presents an estimate of the 
effect on small institutions of the statutory changes implemented 
through these interim final regulations. The Department welcomes 
comments and information related to this analysis.

Succinct Statement of the Objectives of, and Legal Basis for, These 
Interim Final Regulations

    These interim final regulations remove regulatory provisions 
related to the availability of two Pell Grants in one year to comply 
with section 1860(a)(2) of division B of the Department of Defense and 
Full-Year Continuing Appropriations Act, 2011 (Pub. L. 112-10), which 
repealed section 401(b)(5) of the HEA under which an otherwise eligible 
student could receive more than one Federal Pell Grant in an award 
year.

Description of and, Where Feasible, an Estimate of the Number of Small 
Entities to Which These Interim Final Regulations Will Apply

    These interim final regulations affect institutions that 
participate in Title IV, HEA programs and loan borrowers. The 
definition of ``small entity'' in the Regulatory Flexibility Act 
encompasses ``small businesses,'' ``small organizations,'' and ``small 
governmental jurisdictions.'' The definition of ``small business'' 
comes from the definition of ``small business concern'' under section 3 
of the Small Business Act as well as regulations issued by the U.S. 
Small Business Administration (SBA). The SBA defines a ``small business 
concern'' as one that is ``organized for profit; has a place of 
business in the U.S.; operates primarily within the U.S. or makes a 
significant contribution to the U.S. economy through payment of taxes 
or use of American products, materials or labor * * *'' ``Small 
organizations'' are further defined as any ``not-for-profit enterprise 
that is independently owned and operated and not dominant in its 
field.'' The definition of ``small entity'' also includes ``small 
governmental jurisdictions,'' which includes ``school districts with a 
population less than 50,000.''
    Data from the Integrated Postsecondary Education Data System 
(IPEDS) indicate that roughly 3,448 institutions representing 
approximately 63 percent of those institutions participating in the 
Federal student assistance programs meet the definition of ``small 
entities'' when all private nonprofit institutions are classified as 
small because none is dominant in the field. If the $7 million in 
revenue requirement were applied to private nonprofit institutions, the 
number of small entities would be reduced to 2,386 or 43.6 percent of 
institutions. Table 2 summarizes small institutions and their percent 
of AY 2008-2009 Pell Grant recipients and amounts by sector.

[[Page 25899]]

[GRAPHIC] [TIFF OMITTED] TR02MY12.009

    Using the distribution of Pell Grant recipients and amounts at 
small institutions from Table 2 and the Department's estimated two Pell 
Grant recipients and amounts, the estimated maximum cost to small 
institutions across all sectors for the period from 2011-2012 to 2015-
2016 is approximately $1.67 billion. The estimated recipients and 
amounts by type of institution are summarized in Table 3. The amount of 
grant aid lost for any individual institution will depend on the extent 
the second Pell Grant option was utilized at that school. If 
distributed evenly across all small entities, with nonprofit 
institutions subject to the $7 million revenue requirement for a more 
uniform profile of institutions, an annual average of $150,000 would 
not be available from second Pell Grants in one award year. As 
discussed in the Summary of Potential Cost and Benefits section, much 
of this revenue will be available from other sources including the 
preservation of the maximum grant level in the Pell Grant Program, 
student earnings or savings, and increased student debt.

[[Page 25900]]

[GRAPHIC] [TIFF OMITTED] TR02MY12.010

Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of These Interim Final Regulations, Including 
an Estimate of the Classes of Small Entities That Will Be Subject to 
the Requirement and the Type of Professional Skills Necessary for 
Preparation of the Report or Record

    These interim final regulations do not impose any new reporting, 
record keeping, or other compliance requirements on institutions.

Identification, to the Extent Practicable, of All Relevant Federal 
Regulations That May Duplicate, Overlap or Conflict With These Interim 
Final Regulations

    These interim final regulations are unlikely to conflict with or 
duplicate existing Federal regulations.

Alternatives Considered

    No alternatives were considered for the amendments to Sec. Sec.  
690.63(g)(1), 690.63(h), 690.65(c), 690.65(f), and 690.67 because these 
changes implement changes to the HEA enacted by Congress and the 
Department did not exercise discretion in developing these amendments. 
With respect to Sec.  690.64, the Department could have left the 
current regulations in place. However, such an action would have led to 
potentially serious adverse effects on students, as described in the 
Waiver of Rulemaking and Delayed Effective Date section of this 
preamble.

Paperwork Reduction Act of 1995

    These interim final regulations do not create any information 
collection requirements. With the removal of Sec. Sec.  690.63(h) and 
690.67 and the revision of Sec.  690.64, due to the statutory changes, 
the paperwork burden associated with those sections are also removed. 
This change results in the discontinuation of information collection 
1845-0098 and, therefore, the elimination of 109,605 burden hours 
associated with that collection.

Intergovernmental Review

    This program is not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    In accordance with section 411 of the General Education Provisions 
Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on 
whether these regulations require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the program contact person 
listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. Free 
Internet access to the official edition of the Federal Register

[[Page 25901]]

and the Code of Federal Regulations is available via the Federal 
Digital System at: www.gpo.gov/fdsys. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or Adobe Portable Document Format 
(PDF). To use PDF, you must have Adobe Acrobat Reader, which is 
available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.
    You may also view this document in text or PDF at the following 
site: www.ifap.ed.gov/.

(Catalog of Federal Domestic Assistance Number: 84.063 Federal Pell 
Grants)

List of Subjects in 34 CFR Part 690

    Colleges and universities, Elementary and secondary education, 
Grant programs--education, Student aid.

    Dated: April 27, 2012.
Anne Duncan,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary amends 
part 690 of title 34 of the Code of Federal Regulations as follows:

PART 690--FEDERAL PELL GRANT PROGRAM

0
1. The authority citation for part 690 continues to read as follows:

    Authority:  20 U.S.C. 1070a, 1070g, unless otherwise noted.


Sec.  690.63  [Amended]

0
2. Amend 690.63:
0
a. In paragraph (g)(1), by removing the words and citation, ``except as 
provided in Sec.  690.67''; and
0
b. By removing paragraph (h).

0
3. Section 690.64 is revised to read as follows:


Sec.  690.64  Determining the award year for a Federal Pell Grant 
payment period that occurs in two award years.

    (a) If a student enrolls in a payment period that is scheduled to 
occur in two award years--
    (1) The entire payment period must be considered to occur within 
one award year;
    (2) The institution must determine for each Federal Pell Grant 
recipient the award year in which the payment period will be placed;
    (3) If an institution places the payment period in the first award 
year, it must pay a student with funds from the first award year; and
    (4) If an institution places the payment period in the second award 
year, it must pay a student with funds from the second award year.
    (b) An institution may not make a payment which will result in the 
student receiving more than his or her Scheduled Federal Pell Grant for 
an award year.

(Authority: 20 U.S.C. 1070a)



0
4. Section 690.65 is amended:
0
a. In paragraph (c), by removing the words and citation, ``except as 
provided under Sec.  690.67''; and
0
b. By revising paragraph (f) to read as follows:


Sec.  690.65  Transfer student: attendance at more than one institution 
during an award year.

* * * * *
    (f) A transfer student shall repay any amount received in an award 
year that exceeds his or her Scheduled Federal Pell Grant.
    * * *


Sec.  690.67  [Removed and Reserved]

0
5. Section 690.67 is removed and reserved.

[FR Doc. 2012-10559 Filed 5-1-12; 8:45 am]
BILLING CODE 4000-01-P