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(2) Providing the Secretary with the student's name, social security number, amount of overpayment, and other relevant information.

(c) If an institution refers a student who received an overpayment for which it is not liable to the Secretary for recovery, the student remains ineligible, for further Title IV student financial assistance for attendance at that institution until final resolution of the overpayment.

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

§ 690.80 Recalculation of a Pell Grant award.

(a) Change in expected family contribution. (1) The institution shall recalculate a Pell Grant award for the entire award year if the student's expected family contribution changes at any time during the award year. The change may result from

(i) The correction of a clerical or arithmetic error under § 690.14;

(ii) Extraordinary circumstances which affect the expected family contribution under § 690.39 or § 690.48; or (iii) A correction based on information required in § 690.12 or § 690.77.

(2) Except as described in § 690.77(f)(1), the institution shall adjust the student's award when an overaward or underaward is caused by the change in the expected family contribution. That adjustment must be made

(i) Within the same award year-if possible-to correct any overpayment or underpayment; or

(ii) During the next award year to correct any overpayment that could not be adjusted during the year in which the student was overpaid.

(b) Change in enrollment status. (1) If the student's enrollment status changes from one academic term to another term within the same award year, the institution shall recalculate the Pell Grant award for the new payment period taking into account any changes in the cost of attendance.

(2)(i) If the student's projected enrollment status changes during a payment period after the student has begun attendance in all of his or her classes for that payment period, the institution may (but is not required to) establish a policy under which the stu

dent's award for the payment period is recalculated. Any such recalculations must take into account any changes in the cost of attendance. If such a policy is established, it must apply to all students.

(ii) If a student's projected enrollment status changes during a payment period before the student begins attendance in all of his or her classes for that payment period, the institution shall recalculate the student's enrollment status to reflect only those classes for which the student actually began attendance.

(c) Change in cost of attendance. If the student's cost of attendance changes at any time during the award year and his or her enrollment status remains the same, the institution may (but is not required to) establish a policy under which the student's award for the payment period is recalculated. If such a policy is established, it must apply to all students. (Authority: 20 U.S.C. 1070a)

§ 690.81 Fiscal control and fund accounting procedures.

(a)(1) An institution shall establish and maintain on a current basis financial records that reflect all program transactions. The institution shall establish and maintain general ledger control accounts and related subsidiary accounts that identify each program transaction and separate those transactions from all other institutional financial activity.

(2) The institution shall account for the receipt and expenditure of Pell Grant funds in accordance with generally accepted accounting principles.

(b) A separate bank account for Pell Grant funds is not required. However, the institution shall notify any bank in which it deposits Pell Grant funds of all accounts in that bank in which it deposits Federal funds. This notice must be given by including in the name of each such account that Federal funds are deposited therein.

(c) Except for funds received for administrative expenses, funds received by an institution under this part may be used only to pay Pell Grants to students. The funds are held in trust by the institution for the intended stu

dent beneficiaries and may not be used or hypothecated for any other purpose.

(Approved by the Office of Management and Budget under control number 18400536)

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

[50 FR 10724, Mar. 15, 1985, as amended at 53 FR 49147, Dec. 6, 1988]

§ 690.82 Maintenance and retention of records.

(a) Each institution shall maintain adequate records (including those related to verification) which include the fiscal and accounting records that are required under § 690.81, records required for audits in 34 CFR 668.23, the Student Aid Report of each student applying for a Pell Grant, and records indicating

(1) The eligibility of all enrolled students who have submitted valid SARS to the institution;

(2) The name and social security number of and the amount paid to each student;

(3) The amount and date of each payment;

(4) The amount and date of any overpayment that has been restored to the program account;

(5) Each student's cost of attendance;

(6) How each student's full or parttime enrollment status was determined; and

(7) Each student's period.

enrollment

(b)(1) The institution shall make the records listed in paragraph (a) of this section available for inspection by the Secretary's authorized representative at any reasonable time in the institution's offices. It shall keep the records for each award year for five years after that award year has ended.

(2) For any disputed expenditures in any award year for which the institution cannot provide records, the Secretary determines the final authorized level of expenditures.

(c) The institution shall keep records involved in any claim or expenditure questioned by Federal audit until resolution of any audit questions.

(d) An institution may substitute microform copies in lieu of original

records in meeting the requirements of this section.

(Approved by the Office of Management and Budget under control number 18400132)

(Authority: 20 U.S.C. 1070a, 1232f)

[50 FR 10724, Mar. 15, 1985, as amended at 52 FR 45736, Dec. 1, 1987]

§ 690.83 Submission of reports.

(a) An institution shall submit to the Secretary all SAR Payment Documents for a given award year by December 31 following the end of that award year.

(b) An institution shall submit in accordance with deadline dates established by the Secretary, through publication in the FEDERAL REGISTER, other reports and information the Secretary requires in connection with the funds advanced to it and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct.

(Approved by the Office of Management and Budget under control number 18400132)

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

§ 690.84 Audit and examination.

(a) Federal audits. The institution shall give the Secretary, the Comptroller General of the United States, or their duly authorized representatives, access to the records specified in § 690.81 and § 690.82 and to any other pertinent books, documents, papers, and records.

(b) Non-Federal audits. (1) The institution shall have a financial and compliance audit of Pell Grant Program transactions. The audit must be conducted by an independent auditor in accordance with the general standards and the standards for financial and compliance audits in the U.S. General Accounting Office publication, Standards for Audit of Governmental Organizations, Programs, Activities, and Functions. Procedures for audits are contained in audit guides developed by, and available from the Office of the Inspector General of the Department. These audit guides do not impose any requirements beyond those imposed under applicable stat

utes and regulations and GAO's standards.

(2) The audit must be completed not less frequently than once every two years, and be submitted to the Secretary within 9 months of the end of the audit period. Each audit must cover the institution's activities for the entire period since the preceding audit.

(3) The institution must have an audit performed at least once very two years.

(c) Submission and access. The institution shall submit audit reports to the institution's local regional office of the Department of Education's Audit Agency. It shall give the Audit Agency and the Secretary access to records or other documents necessary to the audit's review.

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

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Sec.

Subpart D-How Does a State Administer its Community Service Learning Job Program?

692.30 How does a State administer its community service-learning job program?

Subpart E-How Does a State Select Students Under This Program?

692.40 What are the requirements for student eligibility?

692.41 What standards may a State use to determine substantial financial need? AUTHORITY: 20 U.S.C 1070c-1070c-1070c-4 1070c-4, unless otherwise noted.

SOURCE: 52 FR 45433, Nov. 27, 1987, unless otherwise noted.

Subpart A-General

§ 692.1 What is the State Student Incentive Grant Program?

The State Student Incentive Grant Program assists States in providing grants and work-study assistance to eligible students who attend institutions of higher education and have substantial financial need. The work-study assistance is provided through campusbased community service work learning study programs, hereinafter referred to as community service-learning job programs.

(Authority: 20 U.S.C. 1070c-1070c-4)

§ 692.2 Who is eligible to participate in the State Student Incentive Grant Program?

(a) State participation. A State that meets the requirements in §§ 692.20 and 692.21 is eligible to receive payments under this program.

(b) Student participation. A student must meet the requirements of § 692.40 to be eligible to receive assistance from a State under this program.

(Authority: 20 U.S.C. 1070c-1)

§ 692.3 What regulations apply to the State Student Incentive Grant Program?

The following regulations apply to the State Student Incentive Grant Program:

(a) The regulations in this Part 692. (b) The Education Department General Administrative Regulations

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Secretary (§ 668.2).

State (§ 668.2).

(b) Other definitions that apply to this part. The following additional definitions apply to this part:

"Full-time student" means a student carrying a full-time academic workload-other than by correspondenceas measured by both of the following:

(1) Coursework or other required activities, as determined by the institution that the student attends or by the State.

(2) The tuition and fees normally charged for full-time study by that institution.

"Nonprofit" has the same meaning under this part as the same term defined in 34 CFR 77.1 of EDGAR. (Authority: 20 U.S.C. 1070c-1070c-4)

Subpart B-What Is the Amount of Assistance and How May It Be Used?

§ 692.10 How does the Secretary allot funds to the States?

(a)(1) The Secretary allots to each State participating in the SSIG program an amount which bears the same ratio to the Federal SSIG funds appropriated as the number of students in that State who are "deemed eligible" to participate in the State's SSIG program bears to the total number of students in all States who are "deemed eligible" to participate in the SSIG program, except that no State may receive less than it received in fiscal year 1979.

(2) If the Federal SSIG funds appropriated for a fiscal year are not sufficient to allot to each State the amount of Federal SSIG funds it received in fiscal year 1979, the Secretary allots to each State an amount which bears the same ratio to the amount of Federal SSIG funds appropriated as the amount of Federal SSIG funds that State received in fiscal year 1979 bears to the amount of Federal SSIG funds all States received in fiscal year 1979.

(b) For the purpose of paragraph (a)(1) of this section, a student is "deemed eligible" to participate in a State's SSIG program if the student is in attendance at an institution that is eligible to participate in the State's program.

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

§ 692.11 For what purposes may a State use its payments under the program? A State may use the funds it receives under this part only to make grants to students and to pay wages or salaries to students in community servicelearning jobs.

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

Subpart C-How Does a State Apply To Participate in This Program?

§ 692.20 What must a State do to receive an allotment under this program?

(a) To participate in the State Student Incentive Grant Program, a State shall enter into an agreement with the

Secretary under section 1203 of the HEA (Federal-State Relationship Agreement).

(b) For each fiscal year that it wishes to participate, a State shall submit an application that contains information that shows that its State Student Incentive Grant Program meets the requirements of § 692.21.

(c)(1) Except as provided in paragraph (c)(2) of this section, the State shall submit its application through the State agency designated in its Federal-State Relationship Agreement to administer its State Student Incentive Grant Program as of July 1, 1985.

(2) If the Governor of the State so designates, and notifies the Secretary through a modification to the State's Federal-State Relationship Agreement, the State may submit its application under paragraph (b) of this section through an agency that did not administer its State Student Incentive Grant Program as of July 1, 1985.

(Approved by the Office of Management and Budget under control number 18400544)

CROSS-REFERENCE: See 34 CFR Part 604, Federal-State Relationship Agreements. (Authority: 20 U.S.C. 1070c-2(a))

§ 692.21 What requirements must be met by a State program?

To receive a payment under this program for any fiscal year, a State must have a program that—

(a) Is administered by a single State agency in accordance with the Federal-State Relationship Agreement

under section 1203 of the HEA.

(b) Provides assistance only to students who meet the eligibility requirements in § 602.40;

(c) Provides that assistance under this program to a full-time student will not be more than $2,500 for each academic year;

(d) Provides for the selection of students to receive assistance on the basis of substantial financial need determined annually by the State on the basis of standards that the State establishes and the Secretary approves.

CROSS-REFERENCE: See § 692.41.

(e) Provides that all public or private nonprofit institutions of higher education and all postsecondary vocational

institutions in the State are eligible to participate unless that participation is in violation of

(1) The constitution of the State; or (2) A State statute that was enacted before October 1, 1978;

(f) Provides that, if a State allocates funds to an institution under a formula which is based in part on the financial need of less-than-full-time students enrolled in the institution, a reasonable portion of the institution's allocation must be awarded to those students;

(g) Provides that

(1) The State will pay an amount for grants and work-study jobs under this part for each fiscal year that is not less than the payment to the State under this part for that fiscal year; and

(2) The amount that the State expends during a fiscal year for grants and work-study jobs under this program represents an additional amount for grants and work-study jobs for students attending institutions of higher education over the amount expended by the State for those activities during the fiscal year two years prior to the fiscal year in which the State first received funds under this program;

(h) Provides for State expenditures under the State program of an amount that is not less than

(1) The average annual aggregate expenditures for the preceding three fiscal years; or

(2) The average annual expenditure per full-time equivalent student for those years; and

(i) Provides for reports to the Secretary that are necessary to carry out the Secretary's functions under this part.

(Approved by the Office of Management and Budget under control number 18400544)

(Authority: 20 U.S.C. 1070c-2)

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