§ 614.64 Refinancing.

Normally, delinquent loans will not be refinanced but delinquencies will be paid from available funds as provided in § 614.63(c) of this part. In circumstances where a Borrower demonstrates that sufficient pledged funds or other sources will be available to meet the required payments and deposits under the refinanced loan, but it cannot pay off all accumulated delinquencies within a reasonable period, consideration will be given to refinancing the loan, if requested by a Borrower. The end maturity may be extended up to the 50-year statutory maximum loan term, if permissible under State law, but may not be extended beyond such 50-year term. Any such refinancing shall be based on substantially level annual debt service payments except in exceptional circumstances approved by the Government. A refinancing debt service schedule may not provide for ballooning a final payment which exceeds substantially the level of periodic payments required by the debt service schedule.

such as for classrooms, or leasing or sale to another entity, and should normally be of a temporary nature so that the facility may be returned to an eligible use when feasible.

uses.

(b) Selection of alternative Upon making a determination that an alternative use is appropriate, ED will consider other feasible alternative uses as well as the one proposed by the Borrower. In deciding which alternative use to approve, ED will be guided by the following:

(1) Preference will be given to an alternative use by the Borrower if that use will generate sufficient pledged revenues for the requirements of the ED loan;

(2) Preference will be given to an alternative use not involving major alteration, long-term lease, or sale, which would prevent the facility from being returned to an eligible use;

(3) If an alternative use by the Borrower is not feasible, preference will be given to use by another eligible educational institution if that use will generate sufficient pledged revenues for the requirements of the ED loan.

(c) Terms of alternative use-(1) Leasing. If the ED-assisted facility is leased to another entity, all of the net proceeds of the leasee shall be applied to repayment of the ED loan. If the ED-assisted facility is leased to a leasee, other than a leasee which is an eligible educational institution under the Act, the lease shall provide for payment of a rental at rates not substantially below those which would be charged in the market area for comparable facilities financed at market rates of interest.

(2) Sale. If a ED-assisted facility is sold to another eligible educational institution, the purchaser will be permitted to assume the ED loan provided that the ED loan is reasonably assured of repayment. In the event of sale of a facility to a purchaser other than an eligible educational institution, the related ED loan shall be repaid in full except that, where full repayment is not financially feasible, the repayment requirements shall be in the Government's best financial interest.

§ 614.66 Closing of educational institution. When an educational institution ceases to maintain its existence or accrediation and/or to conduct its normal and customary educational activities, either entirely or at one or more locations where ED facilities are situated, repayment in full of the ED loan shall be required, except as otherwise provided hereinafter. Assumption of the indebtedness by an eligible educational institution will be permissible where FD determines that the loan will be reasonably assured of repayment. Release of guarantors or coobligors in connection with such transfer will not be permissible except in exceptional circumstances approved by ED where such action is determined to be necessary to accomplish a transfer and is in ED's best financial interest. Assumption of the indebtedness by an entity other than an eligible education institution affiliated with the Borrower may be approved only as a means of avoiding financial loss to ED. The terms of any such assumption shall require elimination of the loan to the greatest extent possible, taking into consideration proposed use of the EDassisted facilities and the financial resources and capability of the affiliated entity.

617.6 Determination of costs eligible for Federal assistance.

617.59 Determination of priorities for loan

617.7 Urgency of need for projects of public institutions.

617.8 Grants and loans for reconstruction and renovation projects authorized under Title VII E of the Act.

Opinion of bond counsel.

approvals.

617.60 Loan agreement.

617.61 Loan closing.

617.62 Interim financing. 617.63

Construction fund.

617.64 Investment of idle construction funds.

Sec.

617.65 Disposal of balance remaining in

the construction fund. 617.66 Moratorium on principal or interest payments on loans.

Subpart E-Annual Interest Grants for Construction, Reconstruction, or Renovation of Academic Facilities Under Section 745 of Title VII C of the Act

617.71 Purpose and eligibility.

617.72 Amount of annual interest grants. 617.73 Submission of applications. 617.74 Conditions for approval of annual interest grants.

617.75 Limits of Federal assistance. 617.76 Approval of financing plans. 617.77 Evidence of lowest possible cost of loan.

617.78 Annual interest grant agreement. 617.79 Payment of annual interest grants. 617.80 Reduction of grants if refinancing produces lower costs.

617.81 Application closing dates. 617.82 Preceding provisions not exhaustive of authority of the Secretary.

AUTHORITY: Secs. 701-782 of Pub. L. 89329, Title VII, as amended, 86 Stat. 288-303 (20 U.S.C. 1132a-1132e-1), unless otherwise noted.

SOURCE: 45 FR 28669, Apr. 29, 1980, unless otherwise noted. Redesignated at 45 FR 77369, Nov. 21, 1980.

Subpart A-General Provisions

§ 617.1 Definitions.

"Academic facilities," as defined in section 782(1)(A) of the Act, are further defined and subdivided into the following categories:

(a) "Instructional and library facilities" means—

(1) All rooms or areas used regularly for instruction of students, for faculty offices, or for library purposes; and

(2) Service areas that adjoin and are used in connection with the rooms or areas referred to in paragraph (a)(1) of this section.

"Instruction-related

(b) means

facilities"

(1) All rooms or areas-other than instructional and library facilitiesused for purposes related to the instruction of students or for research or for the general administration of the educational or research programs of an institution of higher education; and

(2) Service areas that adjoin and are used in conjunction with the rooms or areas referred to in paragraph (b)(1) of this section.

(c) "Health-care facilities," as authorized under Titles VII A and C,

means

(1) Infirmaries and all other rooms or areas used for medical examination or treatment of students and institutional personnel; and

(2) Service areas that directly serve the rooms or areas referred to in paragraph (c)(1) of this section.

(d) "Related supporting facilities" means all other areas and facilities necessary for the use, operation, and maintenance of instructional and library facilities, instruction-related facilities, or health care facilities. This term includes building service and circulation areas and central maintenance and utility facilities that serve more than one building, to the degree that these central facilities are used to serve academic facilities eligible under Title VII of the Act.

(e) "Public health type facilities" means facilities as defined in section 782(1)(B)(v) of the Act (Definitions), if these facilities are owned, operated, and maintained by the institution of higher education requesting the approval of a Title VII E project and if—

(1) Funds available for the project are used solely for conversion or modernization to economize on the use of energy resources; and

(2) The project is not limited to facilities described in section 782(1)(B)(v) of the Act.

(20 U.S.C. 1132e-1(1)(B)(v))

"Act" means the Higher Education Act of 1965 (Pub. L. 89-329), as amended. Unless otherwise indicated, title references are to titles of the Act.

"Assignable areas"

(a) Means square footage of floor space in facilities designed and available for assignment to specific functional purposes-such as instruction, research, and administration-and including purposes that are ineligible for assistance under Title VII-such as students' sleeping rooms, apartments, or chapel rooms.

(b) Does not mean

(1) Areas used for general circulation within a building;

(2) Areas for public washrooms; (3) Areas for building maintenance or custodial services; or

(4) Areas in central maintenance and utility facilities that exist only to support the operation and use of other structures on the campus and that are not available for assignment to specific functional purposes as illustrated in paragraph (a) of this section.

(20 U.S.C. 1132e-1 (1) and (2))

"Branch campus" means, within an institution of higher education, a unit that

(a) Is separately organized;

(b) Is located apart from the parent institution; and

(c) Meets in its own right the definition of an institution of higher education as defined in the Act.

(20 U.S.C. 1132e-1(6))

"Capacity/enrollment ratio” means the ratio of (a) the square feet of assignable area of instructional and library facilities to (b) the total student clock-hour enrollment at the campus of an institution. For purposes of this definition, "student clock-hour enrollment" means the aggregate clock hours (sometimes called contact hours) per week in classes or supervised laboratory or shop work for which all resident students-i.e., students enrolled for credit courses on the campus-are enrolled as of a particular date. A campus having a formally established independent study program or programs may include systematically determined equivalents of class or laboratory hours.

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

"Costs required by Section 504."

(a) This term refers to costs for determining eligibility for participation in the program of Federal assistance for the removal of architectural barriers to the handicapped. The term means the costs of reconstruction, renovation, or modification of facilities to remove architectural barriers or otherwise make facilities usable-in whole or in part-by persons with mobility impairments.

(b) However, the amount may not exceed costs necessary to meet the

program accessibility standards of 34 CFR Part 104, the regulations implementing Section 504 of the Rehabilitation Act of 1973.

(c) These costs may include only those reconstruction, renovation, or modification costs ascribable to Section 504 that are necessary to make programs or activities accessible and that cannot be avoided through such means as reassignment of classes or other non-structural alternatives.

(d) These costs may also include(1) Costs already incurred prior to the filing of an application; and

(2) Costs that are related to facilities otherwise ineligible for Federal assistance under Title VII.

(e) However, these costs may not include

(1) Costs incurred prior to, or under contract entered into prior to, June 3, 1977;

(2) Costs required in connection with facilities used for religious worship or for a school or department of divinity;

or

(3) Costs-incurred or to be incurred-for which Federal grant or loan assistance has been provided or approved under any other Federal program regardless of the percentage of those costs covered by the Federal assistance.

(20 U.S.C. 1132d-11(a)(2)(A); H. Rept. 96244, page 85)

"Developing institution" means an eligible institution as defined in Section 302 of Title III of the Higher Education Act of 1965 (20 U.S.C. 1052) and the regulations for the Strengthening Developing Institutions Program (34 CFR Part 624).

"Equipment" means a manufactured item that has an extended useful life, is not consumed in use, and has an identity and function that are not lost through incorporation into a different or more complex unit or substance. Equipment is further subdivided into two categories-built-in equipment and initial equipment-defined as follows:

(a) "Built-in equipment" means equipment that is a permanent part of a structure.

(b) "Initial equipment" means equipment-other than built-in equipment

necessary and appropriate for the initial functioning of a particular academic facility for that facility's specific purpose.

(20 U.S.C. 1132e-1(2))

"Financial hardship," for purposes of eligibility for assistance authorized by section 771(a)(2)(A) of the Act, means that the costs required by Section 504 exceed five percent of the applicant's average annual educational and general expenditures, as reported in the annual NCES survey “Financial Statistics of Institutions of Higher Education" for the three most recent institutional fiscal years.

(20 U.S.C. 1132d-11(a)(2)(A); H. Rept. 96244, page 85)

"Full-time equivalent number of students" means the following:

(a) (1) For purposes of determining State allotments

(i) The number of full-time students enrolled in programs that consist wholly or principally or work normally creditable toward a bachelor's or higher degree;

(ii) One third of the number of parttime students enrolled in the programs referred to in paragraph (a)(1)(i) of this section;

(iii) Forty percent of the number of students enrolled in programs that are not chiefly transferable towards bachelor's or higher degree; and

a

(iv) Twenty-eight percent of the remaining number of the students referred to in paragraph (a)(1)(iii) of this section.

(2) For the purpose of this computation, student enrollment figures for each fiscal year will be those in the most recent Department survey containing data on opening fall enrollments in higher education.

(20 U.S.C. 1132a-1, 1132a-2)

(b) (1) For purposes of reporting undergraduate enrollment trends and projections in connection with an application for financial assistance for an individual institution under Title VII A of the Act, the "full-time equivalent number of students" may be defined by each State commission through a specific provision in its State plan.

"Period of Federal interest," in improvements financed in whole or in part by grants or loans for Title VII E purposes, means

(a) With respect to a grant, a period of 10 years from the completion of the reconstruction or renovation; and

(b) With respect to a loan, the period in which the loan is outstanding.

(20 U.S.C. 1132d-11(d))

"Program accessibility," for purposes of Section 504—and as applied to projects for the removal of architectural barriers under Title VII E-is defined in 34 CFR 104.21 through 104.23. "Project" means all or a portion of one or more structures

(a) That are eligible for grant or loan assistance under a particular part of Title VII;

(b) For which grant or loan assistance is requested in a single application; and

(c) That are part of a unified construction, reconstruction, or renovation activity on the same campus. (20 U.S.C. 1132e-1(2))