mortgage any assets or revenues to be given as security for the proposed loan; and

(e) The applicant's financing plan meets the conditions of § 170.76 and is otherwise practical and feasible.

§ 170.75

Limits governing extent of Federal assistance.

The principal amount of a loan (or portion thereof) on which an annual interest grant is approved may not exceed (a) 85 percent of the estimated development cost of the project or 90 percent of the actual development cost less the amount of any other Federal financial assistance (including loans from nonFederal sources, the repayment of the principal or interest on which is subsidized or insured by an agency of the Federal Government) the applicant has obtained or is assured of obtaining under any law other than that covered by this subpart, with respect to the construction of the project or (b) $5 million: Provided, however, That the aggregate principal amount of loans (or portions thereof) with respect to which annual interest grants are approved during any Federal fiscal year may not exceed $5 million for projects at any one institution or branch campus thereof.

§ 170.76 Approval of financing plans.

(a) Except as provided in paragraph (b) of this section, in order to be acceptable a financing plan submitted pursuant to § 170.73 must: (1) Provide that the term of the loan with respect to which an annual interest grant is to be paid does not exceed 30 years or the useful life of the facilities with respect to which such annual interest grant is to be made, whichever is the lesser; (2) provide that such loan is to be repaid in substantially annual level installments of interest and principal over the term of the loan, except that interest only may be paid for an initial period not exceeding 5 years; and (3) contain such other terms and conditions as will assure the Commissioner that the support provided by the Government over the term of the loan is no more than is necessary to effectuate the purposes of this subpart.

(b) Financing plans may also be асceptable where the term of the loan is

longer than 30 years or the annual installments of interest and principal are not substantially level, if the Commissioner finds that unusual circumstances warrant such exceptions: Provided, however, That in no event shall the term of the loan exceed 40 years.

§ 170.77 Evidence of lowest possible cost of loan.

An applicant shall demonstrate to the satisfaction of the Commissioner that the loan it proposes to obtain is at the lowest possible net interest cost. In the case of an applicant proposing to issue tax-exempt bonds to finance the construction of academic facilities, a sale pursuant to public advertising for bids for the securities in an advertising medium acceptable to the Commissioner will be deemed to meet this requirement. An applicant not issuing tax-exempt securities will be expected to submit offers from at least three (3) lending institutions normally engaged in making long term construction loans. The applicant must have furnished each such institution with the information necessary to enable it to specify in its offer the amount, interest rate, maturity period, security and prepayment provisions of the loan.

§ 170.78 Annual interest grant agree

ments.

Upon approval of an application for annual interest grants, the Commissioner shall prepare and send to the applicant a proposed agreement, which shall contain the terms and conditions relating to the receipt of annual interest grants including a description of the project and the facilities, the maximum principal amount of the loan (or portion thereof) on account of which annual interest grants payments will be made, the maximum annual grant amount and the anticipated term of the annual interest grant payments. The proposed agreement shall also provide that where a loan is not consummated prior to execution of such agreement by the Commissioner, no grant shall be made thereunder unless the Commissioner concurs in the rate of interest and other terms and conditions of the loan. The agreement once executed by the applicant and the Commissioner creates a contractual obligation on the part of the Commissioner to make annual interest grants in future years in accordance with the terms and conditions of the agreement for so long as the applicant carries out its obligations under the agreement. The agreement for annual interest grants is not entered into for the benefit of, nor to induce the making of loans by or the sale of bonds to, third parties, and the Commissioner shall not entertain grievances or claims of such third parties.

§ 170.79 Payment of annual interest grants.

The first payment will normally be made fifteen (15) days prior to the first anniversary date following initial use of the project. Annual interest grants shall be paid annually approximately fifteen (15) days prior to the anniversary date of the loan. The first payment shall accrue from the date of such initial use to the first anniversary date thereafter. Grant assistance shall not accrue during any period prior to initial use of the project. Payment of annual interest grants will usually be made directly to the applicant. However, payment will be made directly to a trustee, paying agent or lender pursuant to an assignment of such payments by the applicant.

to encourage distribution of the available funds in accordance with urgency of need for academic facilities and special consideration will be given to institutions committed to the enrollment of a substantial number of students from low income families. The Commissioner may, from time to time, set closing dates by which applications must be filed in order to be assured of consideration during a given period of time.

§ 170.83 Preceding provisions not exhaustive of authority of Government. The provisions of this subpart are not exhaustive of the authority of the Government to impose, at such time as it may deem appropriate, further limitations respecting the amount of the annual interest grant or the amount on which such grant is based.

PART 171-FINANCIAL ASSISTANCE

FOR ACQUISITION OF EQUIPMENT TO IMPROVE UNDERGRADUATE INSTRUCTION IN INSTITUTIONS OF HIGHER EDUCATION

Sec. 171.1

171.2

171.3

171.4

171.5

§ 170.80 Reduction of grant where refinancing produces lower cost.

171.6

171.7

171.8

171.9

171.10

171.11

171.12

Definitions.

Institutional eligibility.
Conditions for grant approval.

Submission and processing of appli-
cations.

Criteria for standards and methods to determine relative priorities of eligible projects.

Criteria for standards and methods to determine Federal shares of eligible projects.

Fiscal control and fund accounting
procedures.

Retention of records.
State plans.

Requirement for economical methods
of purchase.

Determination of costs eligible for
Federal participation.

Payment of grant funds on approved
projects.

AUTHORITY: The provisions of this Part 171 issued under secs. 601 through 609, 801 through 803, 79 Stat. 1261-1266, 1269-1270; 20 U.S.C. 1121-1129, 1141-1143.

SOURCE: The provisions of this Part 171 appear at 31 F.R. 4795, Mar. 22, 1966, unless otherwise noted.

(a) "Act" means Public Law 89-329, the Higher Education Act of 1965. Unless otherwise indicated, title references are to titles of the Act. All terms defined

in section 801 of the Act shall have the same meaning as given them in the Act. All references to sections are to sections of this part, unless otherwise indicated.

(b) "Assignable area" means square feet of area in facilities designed and available for assignment to specific functional purposes, as distinguished from area in a building used either for janitorial and building maintenance services or for nonassigned use (e.g., public washrooms and general service areas).

(c) "Audiovisual center" means a facility controlled and operated by one or more institutions of higher education, for: (1) The collection, production, custody, cataloguing, maintenance, or distribution of audiovisual materials for use in providing instruction in such institutions of higher education; or (2) the use by students of special audiovisual or other programed instructional equipment on an individual basis for selfinstruction purposes; or (3) a combination of such purposes.

(d) "Basic educational and general expenditures" means the total of all expenditures (including the estimated value of nonsalaried or contributed personal services) no matter by whom made, for a particular institution or branch campus of such institution, for: General administration and general expense; instruction and departmental research; librarles; and operation and maintenance of the physical plant. For purposes of this definition:

(1) "Expenditures for general administration and general expense" includes all expenditures of the general executive and administrative offices serving the institution (or branch campus) as a whole, expenditures for deans of students and their staffs, and for the counseling and guidance program, the placement bureau, the student loan service, the student health service (where not an auxiliary enterprise intended to be selfsupporting), and other expenditures which are of a general character not related to any specific division of the institution (other than libraries, and operation and maintenance of the physical plant, as separately defined in subparagraphs (3) and (4) of this paragraph);

(2) "Expenditures for instruction and departmental research" includes all expenditures of instructional departments (e.g., salaries, office expense and equipment, laboratory expense and equipment, and other expenses), including expendi

tures for departmental research but excluding separately organized or separately budgeted research;

(3) "Library expenditures" includes all expenditures for separately organized libraries, both general and departmental, including those for salaries, wages, other operating expenses, books, and binding costs;

(4) "Expenditures for operation and maintenance of the physical plant" includes salaries, wages, supplies, other expense, and equipment for operation and maintenance of the institutional plant, except those expenditures appropriately chargeable to "auxiliary enterprises," or to "organized activities relating to educational departments;"

(5) All other terms and account classifications used herein shall have the same meaning as given them in College and University Business Administration, Volume I, American Council on Education, Washington, D.C., 1952.

(e) "Branch campus" means a campus of an institution of higher education which is located in a community different from that in which its parent institution is located. A campus shall not be considered to be located in a community different from that of its parent institution unless it is located beyond a reasonable commuting distance from the main campus of the parent institution.

ratio"

(f) "Capacity/enrollment means the ratio of square feet of assignable area of instructional and library facilities (as defined in paragraph (m) of this section) to the total student clock-hour enrollment divided by 100. 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 (1.e., students taking residence credit, irrespective of the time of day or workload of the student) are enrolled as of a particular date. Where formally established independent study programs exist, systematically determined equivalents of class or laboratory hours may be included under "student clock-hour enrollment," subject to verification and adjustment by the State commission.

(g) "Classroom" means, for purposes of eligibility of projects under this part, a "general classroom," "instructional laboratory or shop," "other teaching facility," or "service area for teaching facilities," as such terms are defined in paragraph (m) (1), (2), (3), and (4) of this section. The term does not include faculty offices, library facilities, or any facilities under the categories of "instruction-related facilities" or "related facilities" or "related supporting facilities" as defined in § 170.1(d) (ii) and (iii) of this chapter.

(h) "Commissioner" means the U.S. Commissioner of Education or his desig

nee.

(i) "Eligible subjects" means courses at the undergraduate level (as defined in paragraph (y) of this section) in science, mathematics, foreign languages, history, geography, government, English, other humanities, the arts, and education. As used herein:

(1) "Science" includes the physical, biological, engineering and social sciences, and subjects which are interdisciplinary within the sciences.

(i) "Biological sciences" means the division of the natural sciences which deals with life, including such fields as Agriculture, Biology, Botany, Zoology, Bacteriology, Cytology, Ecology, Embryology, Entomology, Anatomy, Genetics, Microbiology, Nutrition, Pathology, Virology, Physiology, Morphology, Marine Biology, Hydrobiology, and the biological aspects of Anthropology and Psychology.

(ii) "Physical sciences" means the division of the natural sciences which deals primarily with nonliving matter, including such fields as Physics, Chemistry, Geology, Paleontology, Astronomy, Meteorology, Metallurgy, Mineralogy, and branches of these fields.

(iii) "Engineering" means the applied sciences in which a knowledge of the mathematical and natural sciences is applied with judgment to develop ways to utilize, economically, the materials and forces of nature. Included in this definition, for the purposes of the Act, are the "engineering sciences" such as engineering physics, mechanics, and "engineering technology" such as aeronautical engineering technology, civil engineering technology, and electronic engineering technology.

(iv) "Social sciences" means the branch of science that deals with the institutions and functioning of human society and with the interpersonal relationships of individuals as members of society, including such fields as Anthropology, Area Studies (including American Civilization and Culture), Business and Commerce, Economics (including Agricultural Economics), Industrial Re

lations, Linguistics, Psychology, and Sociology. Fields such as History, Government, and Education, while considered branches of Social Science, are given separate, special emphasis in the Act and are separately defined below.

(v) Fields which are interdisciplinary or overlapping within the sciences, include such as the following: Biochemistry, Biophysics, Astrophysics, Geophysics, Geochemistry, Forestry, Oceanography, Home Economics, Library Sciences, and Information Sciences.

(2) "Mathematics" means the logical study of shape, arrangement, and quantity; the science of numbers and their operations, interrelations, combinations, transformations, and generalizations. Included under this definition are all fields dealing with mathematical and statistical theory and methodology as distinguished from fields of study or research the principal content of which is a natural, social or engineering science.

(3) "Foreign languages" means: (1) Any languages other than English; and (ii) English, as a foreign language.

(4) "History" means the study of past and contemporary events in relation to peoples and civilizations.

(5) "Geography" means the study of the spatial distributions and relationships on the earth's surface of those elements that give character to places. These include natural phenomena (such as land, water, air), biotic phenomena (plant and animal life), and human phenomena (such as population, occupations, transportation, and communications). The term includes the study of physical, political, social, economic, and historical geography.

(6) "Government," or "political science" means the study of political and governmental institutions and processes. This definition includes the study of American government, comparative government, international organization, and public administration.

(7) "English" means the study of the English language in its spoken and written forms, and training and practice in the communication skills of listening, speaking, reading, and writing. It includes speech, grammar, literature, language arts, journalism, creative writing, and remedial or supplemental reading training (when given to undergraduate students) in the English language.

(8) "Other humanities" includes such fields as jurisprudence and philosophy.

(9) "The arts" includes such fields as music, drama, dance, folk art, architecture and allied fields, painting, sculpture, photography, graphic arts, industrial design, fashion design, motion pictures, television, and similar major art forms.

(10) "Education" means the study of the learning process and of subjects related to teaching and to the organization and administration of education, including the history and philosophy of education, curriculum development, and programs to prepare students for specialized teaching fields such as physical education, education of the physically, mentally, or emotionally handicapped, agriculture education, business or commercial education, trade and industrial vocational education, music or education.

art

(j) "Equipment" means any instrument, machine, apparatus, or set of articles which meets the following conditions: (1) It retains its original shape and appearance with use; and (2) it is nonexpendable; that is, if the article is damaged or some of its parts are lost or worn out, it is usually more feasible to repair it than to replace it with an entirely new unit.

a

(k) "Full-time equivalent number of students" means, for purposes of determining State allotments, the number of full-time students enrolled in programs which consist wholly or principally of work normally creditable toward bachelor's or higher degree plus onethird of the number of part-time students enrolled in such programs, plus 40 percent of the number of students enrolled in programs which are not chiefly transferable toward a bachelor's higher degree plus 28 percent of the remaining number of such students. Student enrollment figures for each fiscal year for the purpose of this computation shall be those listed in the most recent edition of the Office of Education publication Opening Fall Enrollment in Higher Education.

or

(1) "Institutional fiscal year" means for a particular institution or branch campus a period of 1 year, not necessarily corresponding with the school year, at the end of which financial accounts are closed and reports made, usually June 30 or December 31.

(m) "Instructional and library facilities" means all rooms or groups of rooms used regularly for instruction of students, for faculty offices, or for library purposes. A room intended and equipped for any

of the purposes listed below should be counted in the appropriate category, regardless of the building (e.g., administrative building, library building, or field house) in which it is located. Instructional and library facilities are subdivided into the following categories:

(1) "General classrooms" means all instructional rooms used or intended and equipped to be used chiefly for lectures, recitations, and seminar types of class meetings, regardless of the size of the room. The seating area of an auditorium or theater, if regularly used for scheduled class meetings, should be classified and counted as a general classroom.

(2) "Instructional laboratories or shops" means all instructional rooms equipped for special purposes such as chemistry experiments, language practice, food preparation and service in home economics, shopwork in industrial arts, painting, etc. (Adjoining areas such as a balance room, supply room, dark room, or projection room, are considered to be "service areas for teaching facilities" and are not to be counted with instructional laboratories and shops.)

(3) "Other teaching facilities" means all other rooms and areas regularly used or intended for scheduled class meetings or individual instruction, such as: Music practice rooms (for individual practice) and music studios (where an instructor's office serves also as a studio, the room should be counted under "faculty offices"); playing floors, wrestling and boxing rooms, indoor swimming pools, and indoor track and field areas used regularly for instructional purposes. Storage rooms for musical instruments, seating areas, locker and shower rooms, and equipment issue and storage rooms used in connection with scheduled classes and located in the gymnasium are considered to be "service areas for teaching facilities" and are not to be counted with other teaching facilities.

(4) "Service areas for teaching facilities" means all service areas which adjoin and are used in conjunction with any general classrooms, instructional laboratories or shops, or other teaching facilities. Examples of service areas for teaching facilities are: Closets in general classrooms or in instructional laboratories or shops; rooms adjoining and used in conjunction with instructional laboratories or shops, such as a balance room, a storeroom, supply room, dark room, or projection room; seating areas, locker and shower rooms, and equipment issue