(f) "Department" means the Department of Health, Education, and Welfare.

(g) "Elementary school" means a school which provides elementary education, as determined under State law.

(h) "Equipment" means laboratory and other special equipment as defined in paragraph (i) of this section, including materials as defined in paragraph (j) of this section.

(i) "Laboratory and other special equipment" means (1) Fixed or movable articles, which are particularly appropriate for use in providing education in the critical subjects in an elementary or secondary school and which are to be used either by teachers in connection with teaching or by students in learning in such subjects; (2) audiovisual equipment, such as projectors, recording equipment, television receivers and television tape recorders, to be used, either by teachers in connection with teaching or by students in learning, primarily in providing education in the critical subjects in an elementary or secondary school; (3) "materials" as defined in paragraph (j) of this section and devices (other than those used for printing, such as printing presses and offset printing machines) to be used for preparation of audiovisual and instructional materials for the critical subjects; (4) storage equipment to be used solely for the care and protection of the foregoing items when used in laboratories or classrooms; (5) test-grading equipment to be used primarily in providing education in the critical subjects in an elementary or secondary school; and (6) specialized equipment for audiovisual libraries serving elementary or secondary schools when such equipment is to be used primarily in providing education in the critical subjects.

(The term excludes such items as general-purpose furniture, radio or television broadcasting apparatus, school public address systems, or items for the maintenance and repair of equipment. However, the term does include equipment for maintenance and repair of materials in audiovisual libraries.)

(j) "Materials" means those items which with reasonable care and use may be expected to last for more than one year and are suitable for and are to be used in providing education in the critical subjects in an elementary or secondary school. The term includes such items as tapes and discs; slides and transparencies; films and filmstrips;

books, pamphlets, and periodicals; and other printed and published materials such as maps, globes, and charts. The term does not include such items as textbooks (as defined in paragraph (r) of this section) or chemicals and other supplies which are consumed in use.

(k) (1) "Minor remodeling" means those minor alterations in a previously completed building in space used or to be used as a laboratory or classroom for education in the critical subjects which are needed to make effective use of equipment in providing education in such subjects. The term also includes those minor alterations in a previously completed building which are needed to make effective use of the items referred to in subparagraphs (5) and (6) of paragraph (i) of this section. The term may also include the extension of utility lines, such as for water and electricity, from points beyond the confines of the space in which the minor remodeling is undertaken but within the confines of such previously completed building, to the extent needed to make effective use of equipment. The term does not include building construction, structural alterations to buildings, building maintenance, repair, or renovation.

(2) Minor remodeling may be done in a building owned by or under lease to the applying school. If the building is leased, the leasehold interest shall be sufficient in the light of the cost of the remodeling to be accomplished with loan funds.

(1) "Nonprofit," as applied to a school, means a school owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any shareholder or individual.

(m) "Private," as applied to a school, means a school which is established by an agency other than a State or a political subdivision or any combination of either or both, and which is supported in whole or in part by other than public funds and is administered and controlled by other than publicly elected or appointed officials.

(n) "Project" means a proposal by a school, as detailed in a loan application, to strengthen instruction in the critical subjects through the acquisition of laboratory and other special equipment or minor remodeling.

(o) "School" means a division of instructional organization consisting of a group of pupils comprised of one or more grade groups, organized on a class basis as one unit with one or more teachers to give instruction of a defined type, and housed in a school plant of one or more buildings. More than one school may be housed in one school plant as when elementary and secondary schools are so housed.

(p) "Secondary school" means a school which provides secondary education, as determined under State law, except that the term does not include any education provided beyond grade 12.

(q) "State" means a State of the Union, Puerto Rico, the District of Columbia, the Canal Zone, Guam, American Samoa, or the Virgin Islands.

(r) "Textbook" means a book or workbook, or manual, which is used as the principal source of study material for a given class, or group of students, a copy of which is expected to be available for the individual use of each pupil in such a class or group of students.

[30

(Sec. 17, 80 Stat. 1245, 20 U.S.C. 443 (a)) F.R. 994, Jan. 30, 1965, as amended at 31 F.R. 825, Jan. 21, 1966; 32 F.R. 4162, Mar. 17, 1967]

Subpart C-Application

§ 142.3 Application for loan.

(a) Filing application. A private nonprofit elementary or secondary school, or its governing authority, desiring to borrow funds under the regulations in this part shall file an application for that purpose with the Commissioner.

(b) Content of application. Such an application shall include:

(1) An appropriate identification of the applicant school;

(2) Satisfactory evidence of the applicant's eligibility as a private nonprofit elementary or secondary school;

(3) Statements of financial condition and information concerning cerdit of the applicant and of any proposed guarantor;

(4) A request for a loan in a definite amount;

(5) A proposed plan of repayment of principal with interest not to extend beyond 10 years from the date of the loan; (6) An itemized list of the equipment, including materials, which is proposed to be acquired with the loan funds and the estimated cost thereof, the list to be organized by subject area and grade level

(i.e., elementary or secondary) at which the equipment is to be used;

(7) If funds are requested for minor remodeling, a full description of the work to be done, the estimated cost thereof, and the necessity for such minor remodeling in order to make effective use of equipment;

(8) A certification that the equipment is to be used primarily for providing education in the critical subjects, except that in the case of storage equipment it will be used solely for the care and protection of equipment, including materials for providing education in the critical subjects, and a certification that the minor remodeling, if any, is to be performed to make more effective use of equipment in providing education in the critical subjects;

(9) A description showing the direct relationship of the proposed expenditures to the overall design for enriching the planned educational program and the achievement of desired curriculum goals in the critical subject areas; and

(10) Such additional information as the Commissioner may require.

(c) Authorization for application. The application shall be signed by an authorized representative of the school, and shall contain satisfactory evidence of(1) The authority to make the loan application;

(2) The authority of the person signing the application to act as the representative of the school and to negotiate for the loan;

(3) The legal identity of the corporation, association or other entity that will be the maker of the note; and

(4) The designation, by title, of the officer, or officers, empowered to execute the note on behalf of such entity.

Subpart D-Loan Procedures

§ 142.4 Review of application.

Action with respect to approving a loan application will be taken only after a review of information contained in the application and any other pertinent information which the Commissioner may possess.

§ 142.5 Action on approved application.

(a) Execution of note. After the Commissioner approves an application for a loan, he will so notify the applicant and will require the execution of a promissory note, which will include a schedule of payments of principal, with interest

accruing on the unpaid principal of the loan to the dates of such payments.

(b) Payment to school. Upon receipt of a duly executed note, the Commissioner will cause the loan funds to be paid by the U.S. Treasury to the applicant at the time loan funds will be needed.

(c) Cancellation of loan approval. If the applicant does not request the loan funds within a reasonable time, the Commissioner may cancel the approval of the loan.

§ 142.6 Loan conditions.

(a) Limitation on amount. Each loan will be limited to the amount which may reasonably be expected to be expended without undue delay for the acquisition of equipment or for minor remodeling. (b) Assurance of repayment. loans will be made on the basis of such security or evidence of financial responsibility as will reasonably assure repayment.

All

(c) Use of loan funds. All loans will be subject to the condition that the funds borrowed will be used only for the acquisition of equipment, or for the performance of minor remodeling, substantially similar to the project described in the approved application.

(d) Unused and unreported funds. Loan funds that are not used within a reasonable time for the purposes set out in paragraph (c) of this section, and loan funds used but not reported as required in § 142.9, shall immediately become due and payable, with interest accrued thereon. This paragraph shall not apply if the total amount not used for the acquisition of equipment, or for the performance of minor remodeling, and not reported does not exceed two percent of the amount lent or $200, whichever is smaller.

(e) Misused funds. Loan funds that are used for purposes other than those provided for in § 142.1 shall immediately become due and payable, with interest accrued thereon.

(f) Disposal and diversion of equipment acquired. If during the period of the loan the applicant disposes of equipment or diverts its use, the balance of the loan shall, at the option of the Commissioner, become immediately due and payable, with interest accrued thereon. Any such diversion not consistent with the Act and regulations, and any such disposal, shall be reported to the Commissioner. Equipment acquired under an approved project for the critical subjects

may be used when available and suitable in providing education in other subjects, if there exists a critical need therefor in the judgment of the borrower. Equipment shall be deemed available only when it is not needed for the time being for use in the critical subjects.

(g) Time of acquisition. Loan funds shall not be used for the acquisition of equipment, including minor remodeling, for which firm commitments have been made prior to the approval of the application.

(h) Equipment from a Communist country. Annual appropriation acts for the Department of Health, Education, and Welfare have provided that no part of the funds appropriated for "Defense Educational Activities" shall be available for the purchase of teaching equipment, or equipment suitable for use for teaching, in certain subjects, which can be identified as originating in or having been exported from a Communist country, unless such equipment is unavailable from any other source. Accordingly, such a condition would apply to all loans made under sections 305 and 1008 of the Act. A violation of such a condition would constitute a misuse of funds which will cause them to become immediately due and payable, with interest accrued thereon. Inquiry should be made of the Commissioner if the applicant has any question whether a specific proposed use of loan funds might violate such a condition.

§ 142.7 Interest.

(a) Determination of interest rate. Loans will bear interest at the rate arrived at by adding one-quarter of one per centum per annum to the rate which the Secretary of the Treasury determines to be equal to the current average yield on all outstanding marketable obligations of the United States as computed at the end of the fiscal year next preceding the date the application for the loan is approved and by adjusting the result so obtained to the nearest one-eighth of one per centum.

(b) Effective interest rate. The interest rate in effect at the time a loan is approved will remain in effect for the life of the loan.

(c) Date of loan. The date of the U.S. Treasury check paying the funds to the applicant will be the date of the loan and the date from which interest accrues.

§ 142.8 Repayment.

(a) Schedule of repayments. Repayments of principal with accrued interest shall be made on such dates as may be agreed upon by the Commissioner and the applicant.

(b) Date of maturity. A loan may be made for any period of time except that the date of maturity shall be not more than ten years after the date on which the loan is made.

(c) Prepayment. Loans may be prepaid in full or in part at any time, with accrued interest to the date of payment, without penalty for prepayment.

§ 142.9 Reports and records.

(a) Reports. Each applicant receiving a loan shall furnish a completion report upon completing the approved project, and shall furnish such progress or other reports as the Commissioner may from time to time require regarding the use of loan funds.

(b) Records. Each applicant receiving a loan shall keep the loan in a separate bank account or maintain a separate accounting of such funds sufficient readily to identify all transactions with the loan funds. Each such applicant shall also maintain intact all records supporting the use of loan funds for three years after receipt of such funds, or until the loan has been repaid in full, whichever is later. Such records shall be made available to fiscal representatives of the Government for audit purposes.

Subpart G-The Humanities and The Arts

SOURCE: The provisions of this Subpart G appear at 31 F.R. 825, Jan. 21, 1966, unless otherwise noted.

§ 142.20 Acquisition of equipment and minor remodeling for instruction in the humanities and the arts.

(a) The Commissioner will reserve 12 percentum of the funds appropriated pursuant to section 12 of the National Foundation on the Arts and the Humanities Act of 1965 (P.L. 89-209) and will allot the amount so reserved among the several States (other than the Canal Zone) in the same manner as is provided for in section 305(a) of the National Defense Education Act of 1958, and will reallot such funds among such States in the same manner as is provided for in

section 302(c) of said National Defense Education Act of 1958.

(b) Funds alloted or realloted under paragraph (a) of this section will be available for the acquisition of equipment and minor remodeling for use in providing education in the humanities and the arts and administered in the same manner as funds similarly allotted or reallotted under sections 305(a) and 302(c) of the National Defense Education Act of 1958 for the acquisition of equipment and minor remodeling for use in providing education in the critical subjects are administered under Subparts A through D of this part.

§ 142.21 Definitions.

As used in this subpart:

(a) The term "The humanities" includes, but is not limited to, the study of the following: Language, both modern and classic; linguistics; literature; history; jurisprudence; philosophy; archeology; the history, criticism, theory, and practice of the arts; and those aspects of the social sciences which have humanistic content and employ humanistic methods.

(b) The term "The arts" includes, but is not limited to, music (instrumental and vocal), dance, drama, folk art, creative writing, architecture and allied fields, painting, sculpture, photography, graphic and craft arts, industrial design, costume and fashion design, motion pictures, television, radio, tape and sound recording, and the arts related to presentation, performance, execution, and exhibition of such major art forms.

Estimates and financial reports.
Federal payments.

Effect of Federal payments and real-
lotment.

Certifying payments.

Interest on Federal grants.

Subpart E-State Supervisory Services and
Administration

143.25 Programs for supervisory services and administration.

143.26 Studies, investigations, and demonstrations.

143.27 Professional personnel.

143.28 Conduct of supervisory or related services.

Subpart F-Program for Testing Aptitudes and Ability

143.29 Purposes of testing program. 143.30 Testing defined.

143.31

Conduct of testing program.

143.32 Plan requirements for testing programs.

Subpart G-Guidance and Counseling Programs

143.33 Scope and purposes. 143.34 Categories of expenditures applicable to approved local guidance and counseling programs.

143.35 Plan requirements applicable to guidance and counseling programs.

143.36 Transition provisions.

AUTHORITY: The provisions of this Part 143 issued under sections 501-504, 1001, 72 Stat. 1592-1593, 1602, as amended, 20 U.S.C. 481-484, 581.

SOURCE: The provisions of this Part 143 appear at 30 F.R. 134, Jan. 7, 1965, unless otherwise noted.

(e) "Fiscal year," as used with respect to reporting and accounting requirements, means the period beginning on the first day of July and ending on the following June 30. (The calendar year of the ending date is used to designate the fiscal year.)

(f) "Junior college" means an institution of higher education which (1) is organized and administered principally to provide a two-year program which is acceptable for full credit toward a bachelor's degree; (2) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate; (3) is legally authorized within the State to provide a program of education beyond secondary education; (4) is a public or other nonprofit institution; (5) is accredited as a junior college by a nationally recognized accrediting agency or association or, if not so accredited, is an institution whose credits are accepted, on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited; and (6), if a branch of an institution of higher education offering four or more years of higher education, is located in a community different from, and beyond a reasonable commuting distance from, the community in which the main campus of the parent institution is located.

(g) "Local educational agency" means a board of education or other legally constituted local school authority having administrative control and direction of public elementary or secondary schools in a city, county, township, school district, or other political subdivision in a State, or any other public institution or agency having administrative control and direction of a public elementary or secondary school.

(h) "Public," as applied to any school or institution, includes a school or institution of any agency of the United States, except that no such school or institution shall be eligible to receive any grant, loan, or other payment under the Act.