tution itself (except in the case of a proprietary institution of higher education) or work for a public or private nonprofit organization in any State (42 U.S.C. 2754(a)(1)).

(1) Such programs:

(i) Must not result in the displacement of employed workers or impair existing contracts for services;

(ii) Must not involve the construction, operation, or maintenance of so much of any facility as is used or is to be used for sectarian instruction or as a place of religious worship.

(2) The work provided under such programs (i) must not involve any partisan or nonpartisan political activity associated with a candidate, or contending faction or group, in an election for public or party office, and (ii) must be governed by such conditions of employment, including compensation, as will be appropriate and reasonable in light of such factors as type of work performed, geographical region, proficiency of the employee, and any applicable Federal, State, or local legislation.

(b) [Reserved]

(c) Work for a public or private nonprofit organization. To be eligible for Federal financial participation, work for a public or private nonprofit organization other than the institution must (1) be in the public interest (devoted to the general, national or community welfare rather than that of a particular interest or group), and (2) be evidenced by a written agreement containing the conditions of such work between the institution and the organization. The institution is responsible for ensuring that any arrangements be with a reliable organization with professional direction and staff, and that the work performed by each student will be properly supervised, and consistent with the purposes of the Act.

(d) Work in the public interest. In no event shall work be considered to be in the public interest where (1) it is work for which the political support or affiliation of the student is a prerequisite or consideration for employment, (2) it is work to be performed for an elected official other than as part of the regular administration of Federal, State or local government or (3) it is work which is primarily for the benefit of the members of a limited membership organization (such as a credit union, fraternal order, or a cooperative), rather than the public. [34 F.R. 7632, May 13, 1969, as amended at 36 F.R. 13688, July 23, 1971]

§ 175.5 Eligibility and selection of student participants.

(a) Eligibility. A student is eligible for part-time employment under the WorkStudy Program only during periods in which he meets all of the following conditions:

(1) Is a national of the United States, or is in the United States for other than a temporary purpose and intends to become a permanent resident thereof, or is a permanent resident of the Trust Territory of the Pacific Islands;

(2) Is in need of the earnings from such employment in order to pursue a course of study at the institution;

(3) Is capable, in the opinion of the institution, of maintaining good standing in such course of study while employed under this program; and

(4) Has been accepted for enrollment as a full-time student at the institution or, in the case of a student already enrolled in and attending the institution, is in good standing and in full-time attendance there, either as an undergraduate, graduate or professional student.

(b) Eligibility of students attending area vocational schools. A student enrolled in an area vocational school is eligible for employment under the College Work-Study Program only if he meets the following conditions in addition to the provisions described in paragraph (a) of this section:

(1) Has a certificate of graduation from a school providing secondary education or the recognized equivalent of such a certificate, and

(2) Is pursuing a program of education or training which requires at least 6 months to complete and is designed to prepare the student for gainful employment in a recognized occupation.

(c) Determination of need. In determining whether, and to what extent, a student is in need of the earnings from employment, the institution shall, at least annually, (1) determine what income, assets, and other resources (including other forms of aid) are available to the student for the time period under consideration; (2) calculate according to standards published from time to time by the Commissioner what portion of the income, assets, and resources of the student's family may reasonably be expected to be made available to the student; and (3) determine the cost reasonably necessary for the student's attendance at the institution, including any special needs and obligations which

directly affect the student's financial ability to attend the institution on a full-time basis. A student shall be considered to be in need to the extent that such costs of attendance exceed the sum of the amounts determined to be available to the student and the amounts, if any, which may reasonably be expected to be made available to him by his family.

(d) Selection of students. In the selection of students for employment under the Work-Study Program, an institution shall give preference to students from low-income families.

(e) Availability of student employment. Each institution shall make employment under the Work-Study Program, or equivalent employment offered or arranged for by the institution, reasonably available (to the extent of available funds) to all eligible students in the institution in need thereof.

(f) Record of approval or disapproval. Each institution shall maintain records which reflect the approval or disapproval of all or part of each student's application for employment under the program and which identify the institutional officer who made each such determination. § 175.6 Limitations on the number of hours of employment.

(a) During periods of regular enrollment, when classes in which a student is enrolled are in session, he shall be limited to working no more than an average of 15 hours per week under the program, averaged over the semester or other time period on the basis of which the institution in which he is enrolled awards academic credits. Work performed during any week when the student is on vacation shall not exceed 40 hours and shall not be counted as contributing toward the average of 15 hours per week established in the preceding sentence.

(b) During periods of nonregular enrollment, when classes in which a student is enrolled are in session he may be employed under the program for as many as 40 hours per week or such lesser number of hours per week as the institution may determine in accordance with its own standards and practices and considering (1) the extent of the student's financial need and (2) the harm or potential harm of a particular combination of hours of work and hours of study on a given student's health or academic progress.

(c) During periods not covered under paragraphs (a) and (b) of this section,

a student may work up to 40 hours per week under the program.

§ 175.7 Use of funds.

(a) Federal funds made available on the basis of an approved application submitted pursuant to this part may be used only (1) to pay the Federal share of ing in such course of study while employed in eligible Work-Study programs, and (2) as payments to an eligible institution in lieu of reimbursement for its expenses in administering the program during the fiscal year. The amount paid in lieu of expenses of administration may not exceed 3 percent of the compensation earned by the students, including the Federal share and the institutional share for both on and off campus programs. However, the aggregate amount paid to an institution in lieu of expenses for administration under this program and the Educational Opportunity Grant Program (20 U.S.C. 1061) plus the amount withdrawn from the institution's student loan fund under section 204 (b) of title II of the National Defense Education Act of 1958 (20 U.S.C. 421) may not exceed $125,000 for a fiscal year (42 U.S.C. 2754 (a) (2); 20 U.S.C. 1088(b)).

(b) Interest, if any, earned on Federal funds shall be remitted to the Commissioner in accordance with instructions issued by him.

[34 F.R. 7632, May 13, 1969, as amended at 36 F.R. 13688, July 23, 1971]

§ 175.8 Limitations on Federal share of student compensation.

(a) Except as otherwise provided for under paragraph (c) of this section, the Federal share of the compensation of students employed in any Work-Study Program under an institutional agreement shall not exceed 80 percent.

(b) The Federal share of compensation for such employment shall be calculated on the basis of the hourly rate paid the student for actual time on the job but such calculation shall not include any compensation paid which is in excess of such maximum hourly wage rate as may from time to time be set by the Commissioner, or any costs of the employer's contribution to Social Security, workmen's compensation, retirement, or any other welfare or insurance programs which may be paid by the employer on account of a student employed under the Work-Study Program.

(c) (1) The Commissioner may from time to time approve a Federal share of the compensation of students employed

in a College Work-Study Program of up to 100 percent if the institution under whose agreement with the Commissioner such program is being conducted has (or can establish to the satisfaction of the Commissioner that it will have during the period during which the increased Federal share is to apply) a full-time enrollment composed at least in half of students whose parents have a combined gross annual income of $7,500 or less. (2) A Federal share in excess of 80 percent shall be applicable only to such compensation as is paid to students which is in excess of (i) the institution's established level of participation in the College Work-Study Program, or (ii) such other amount as may be specified by the Commissioner. For the purpose of this subsection, an institution's established level of participation in the College Work-Study Program is that level of student employment under the program which on an annual basis accounts for expenditures of an amount equal to 125 percent of its College Work-Study Program grant for calendar year 1970. [35 F.R. 12543, Aug. 6, 1970]

§ 175.9 Minimum wage rate.

The minimum rate of compensation for a student employed under the WorkStudy Program shall be

(a) $1.15 an hour for work performed through January 31, 1969;

(b) $1.30 an hour for work performed from February 1, 1969, through January 31, 1970;

(c) $1.45 an hour for work performed from February 1, 1970, through January 31, 1971; and

(d) $1.60 an hour for work performed thereafter;

(e) Or such higher minimum wage as may be required under any applicable Federal, State, or local legislation; except that the Commissioner may approve a lower rate of compensation in cases (1) where a lower minimum wage for such employees has been established by the Secretary of Labor, under the provisions of the Fair Labor Standards Act, or (2) where exceptional circumstances warrant a lower rate and where the approval of a lower rate is not precluded by law and is consistent with and promotive of the purposes of this part. § 175.10 Nature and source of institu

tional share of student compensation. (a) An institution may use any source ..available to it to pay its share of the

compensation paid to students employed under the Work-Study Program.

(b) No institution shall solicit or permit any public or private nonprofit organization with which it has an arrangement pursuant to § 175.4 (c) to solicit from a student or any other person any fee, commission, or compensation of any kind, or the granting of a gift or gratuity of any kind, as a consideration or a prerequisite for the employment of any particular student under the program.

§ 175.11 Maintenance of level of expenditures.

(a) The institution shall continue to spend in its own scholarship and student aid program, from sources other than funds received under title IV, part A or part C, of the Higher Education Act of 1965, as amended, not less than the average expenditure per year made for that purpose during the most recent period of 3 fiscal years preceding the effective date of the institutional agreement or the fiscal year of the first allocation of funds made under part C or part A, of the Act, whichever is the latest.

(b) An institution shall not be deemed to have failed to meet the requirement set forth in the preceding subsection if its inability to expend the amount required thereunder is solely attributable to the withdrawal of funds for student aid programs from outside sources (42 U.S.C. 2754(a) (5)).

[36 F.R. 13688, July 23, 1971]

§ 175.12 Coordination of student financial aid programs.

In order to carry out the purpose of the Work-Study Program, the institution shall provide for the coordination of this program with other programs of student financial aid, including the National Defense Student Loan and Educational Opportunity Grants Programs where the institution also participates in such programs. Responsibility for the general conduct of the operation of the Work-Study Program shall be assigned to an institutional official who has other student financial aid responsibility. § 175.13

Institutional agreement and application for funds.

(a) Applications for Federal funds under this part shall be approved only if there is in effect an institutional agreement. Such agreement shall be executed

by an official of the institution who is legally authorized to commit the institution.

(b) Applications for Federal funds must be submitted to the Commissioner by an authorized official of the institution in such form and at such time as the Commissioner may prescribe. § 175.14

Criteria for approval of institutional applications.

In order to achieve equitable distribution of assistance as required by section 446 of the Act, institutional applications for the allocation of funds under this program shall be reviewed and approved, in whole or in part, on the basis of, but not limited to, the following criteria:

(a) Whether the institution employs under the program a large proportion of students from low-income families in relation to the total number of needy students employed under the program;

(b) Whether provision has been made for effective administration of the program, including effective coordination with institutional and other Federal programs of student financial aid;

(c) Whether public and private nonprofit organizations, especially those engaged in health, education, welfare, and related public service activities have been included;

(d) Whether the institution has demonstrated a strong commitment to enroll students from low-income families, as evidenced by (1) specialized recruitment and admission, such as that provided through the programs of Talent Search or Upward Bound, (2) remedial instruction, (3) specialized counseling, and (4) any other relevant factors;

(e) The anticipated number of students to be employed under this program as compared to the institution's anticipated enrollment;

(f) The anticipated average compensation of Work-Study students in relation to the institution's average educational costs;

(g) The institution's utilization of Work-Study Program funds, if any, allocated in previous years; and

(h) The institution's total request for Federal student financial aid funds (including Educational Opportunity Grants and National Defense Student Loans) in relation to the average cost of education at the institution and the institution's anticipated enrollment.

§ 175.15 Payment and reallocation of grant funds.

(a) Payment of funds. Funds will be made available in advance on the basis of substantiated need and periodic fiscal reports submitted by the institution.

(b) Reallocation of unused Federal funds. Any funds which are available to an institution but not used, or which the institution agrees will not be used, by the end of the period for which such funds were made available shall, in the discretion of the Commissioner, either remain available for use by the institution during a subsequent grant period or be made available for use by other eligible institutions.

(c) No waiver. Neither approval of any application nor any payment of funds to an institution shall be deemed to waive the right or duty of the Commissioner to withhold funds by reason of failure of the institution to observe, before or after such administrative action, any Federal requirement.

§ 175.16 Fiscal procedures, records, and reports.

(a) Fiscal procedures. (1) The institution shall administer the Work-Study Program in such a manner as to provide for an adequate system of internal controls. Wherever practical, the various administrative responsibilities shall be divided so as to prevent the handling of all aspects of the program by a single individual.

(2) If a fiscal agent is utilized by the institution, its function must be limited solely to the performance of ministerial acts. The responsibilities of the institution to make determinations relative to the eligibility of students for employment under the program cannot be delegated.

(3) Payments to students shall be made at least once a month. The institution is responsible for ensuring that students are paid the full amount of wages earned under the program, whether the work is for the institution itself or for a public or private nonprofit organization.

(b) Records. The institution shall maintain, on a current basis, adequate records which reflect all transactions with respect to the program, and shall establish and maintain such general ledger control accounts and related subsidiary accounts as are prescribed by the Commissioner. Such records shall:

(1) Meet at least the minimum standards prescribed by the Commissioner as set forth in the most recent official College Work-Study Manual and other official guidelines that may be issued from time to time;

(2) Be maintained in such a manner as to separately identify all program transactions from other institutional funds and activities; and

(3) Be maintained in such a manner as to be readily auditable. All records pertaining to activity during a given fiscal year, including applications of students for employment under the WorkStudy Program during that fiscal year shall be retained for a period of 3 years following the end of the fiscal year, or until audited by an authorized representative of the Federal Government, whichever is later, except that such records need not be retained longer than 5 years after the end of the fiscal year. Records involved in any claim or expenditure questioned on audit shall be retained until all such questions have been resolved (42 U.S.C. 2754(a) (8); 20 U.S.C. 1088(c)).

(c) Reports. Institutions shall submit such reports and information as the Commissioner may reasonably require in connection with the administration of the Work-Study Program and shall comply with such procedures as he may find necessary to ensure the correctness and verification of such reports.

[34 F.R. 7632, May 13, 1969, as amended at 36 F.R. 13688, July 23, 1971]

§ 175.17 Preceding provisions not exhaustive of jurisdiction of the Commissioner.

No provision of this part now or hereafter promulgated shall be deemed exhaustive of the jurisdiction of the Commissioner under the Act. The provisions of this part may be modified or further regulations may be issued hereafter as circumstances may warrant. PART 177-FEDERAL, STATE, AND PRIVATE PROGRAMS OF LOWINTEREST LOANS TO VOCATIONAL STUDENTS AND STUDENTS IN INSTITUTIONS OF HIGHER EDUCATION Subpart A-General Provisions

(a) "Act" means title IV, part B of the Higher Education Act of 1965 (Public Law 89-329) as amended.

(b) "Internal Revenue Code" means the Internal Revenue Code of 1954 as amended (title 26, United States Code).