(Approved by the Office of Management and Budget under control number 18400580)

(Authority: 20 U.S.C. 1132g-1)

§ 614.46 How must pledged revenues be applied?

(a) A borrower that has pledged project revenues-either net or grossas security for its loan must deposit all pledged revenues in a separate fund in accordance with the terms of the loan agreement.

(b) This fund is known as the Revenue Fund.

(c) The borrower shall make repayments on the loan from this fund in accordance with the terms of the loan agreement.

(Authority: 20 U.S.C. 1132g-1(c))

(2) In no case may a loan repayment period exceed the lesser of 50 years or the estimated useful life of the facilities to be constructed, reconstructed, renovated, or purchased with the proceeds.

(b) Loans must bear interest at a rate not to exceed 5.5 percent per annum.

(c) Unless the Secretary authorizes otherwise

(1) The borrower must repay the loan semi-annually in substantially level total annual installments of principal and interest.

(2) The Secretary may approve a loan that does not mature serially if that type of loan is necessary to be compatible with a borrower's total financial planning.

(3) For a reasonable period of timenormally not exceeding two years following the closing of the loan-the Secretary may permit a borrower to make payments of interest only. (Authority: 20 U.S.C. 1132g-1(c))

§ 614.48 What are borrowers' non-financial obligations?

In addition to its financial obligations under the loan agreement, a borrower under this program must-as required in the loan agreement-agree to

(a) Maintain its status as an eligible educational institution, including its accreditation;

(b) Use the project for the purpose or purposes for which the loan was made, unless the Secretary approves a change of purpose;

(c) Maintain insurance on the project facilities;

(d) Repair and maintain the project facilities; and

(e) Never use the project facilities for religious worship or a sectarian activity or for a school or department of divinity.

(Authority: 20 U.S.C. 1132g-1(c))

Subpart E-What Conditions Must be met for a Discounted Prepayment of a Loan?

§ 614.50 How does the Secretary provide for a discounted prepayment of a loan? (a)(1) The Secretary may provide a discount for prepayment in full of a college housing loan in an amount determined to be in the best financial interests of the Government for institutions that meet the conditions established in paragraph (b) of this section.

(2) The discount is applicable both to loans in current payment status and to loans in default as long as an institution does not become delinquent or in default on its loans after October 1, 1986. The Secretary reviews proposals from institutions with defaulted loans separately from those in current payment status in order to provide institutions in default all possible guidance in accomplishing the prepayment of their college housing loans.

(b) The Secretary may approve a proposal from an institution for discounted prepayment of a college housing loan if

(1) The prepayment is made from non-Federal sources;

(2) The prepayment is made on a loan both issued before October 1,

1986 and outstanding for at least five years;

(3) The prepayment is not derived from proceeds of obligations, the income of which is exempt from taxation under the Internal Revenue Code of 1954; and

(4) The prepayment is in an amount determined in accordance with paragraph (c) of this section;

(c) The Secretary determines the amount of a prepayment for a college housing loan based on

(1) Current market yields on outstanding marketable obligations of the United States with remaining periods to maturity comparable to that of the loan to be prepaid;

(2) Current fair market value of outstanding marketable obligations that are of comparable quality to that of the loan to be prepaid;

(3) Current and anticipated administrative costs incurred by the Secretary in servicing the loan to be prepaid; or (4) Current net proceeds that the Secretary would receive from nongovernmental investors, if the loan to be prepaid were purchased by such investors on the open market.

(Section 762 (c), (d), (e) of the Higher Education Act of 1965, as added by the Higher Education Amendments of 1986, Pub. L. No. 99-498)

(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

in

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

(Authority: 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.

(Authority: 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.

(Authority: 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.

(Authority: 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.

(Authority: 20 U.S.C. 1132d-11(a)(2)(A); H. Rept. 96-244, 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.

(Authority: 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.

(Authority: 20 U.S.C. 1132d-11(a)(2)A); H. Rept. 96-244, 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 a bachelor's or higher degree; and

(iv) Twenty-eight percent of the remaining number of the students referredo 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.

(Authority: 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.

(2) If a State plan does not define the term, "full-time equivalent number of students"-for application purposes-means the total number of full-time students plus one-third of the number of part-time students.

(c) For the purpose of the definition of "full-time equivalent number of students," full-time students are those

carrying at least 75 percent of a normal student-hour load.

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

High absolute cost, for purposes of eligibility for assistance authorized by section 771(a)(2)(A) of the Act, means that the "costs required by Section 504" on the campus for which an application is submitted exceed $500,000. (Authority: 20 U.S.C. 1132d-11(a)(2)(A); H. Rept. 96-244, page 85)

Institution or institution of higher education means that part of an educational institution that meets the requirements in section 1201(a) of the Act. The term “educational institution" is limited to establishments at which teaching is conducted.

(Authority: 20 U.S.C. 1141(a))

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.

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

Reconstruction or renovation project under Title VII E of the Act means a reconstruction or renovation project designed primarily to enable an institution to

(a) Economize on the use of energy resources;