[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR673.4]

[Page 561-562]
 
                           TITLE 34--EDUCATION
 
 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION
 
PART 673_GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM, FEDERAL 
 
  Subpart B_General Provisions for the Federal Perkins Loan, FWS, and 
                             FSEOG Programs
 
Sec. 673.4  Allocation and reallocation.

    (a) Allocation and reallocation of Federal Perkins Loan funds. (1) 
The Secretary allocates Federal capital contributions to institutions 
participating in the Federal Perkins Loan Program in accordance with 
section 462 of the HEA.
    (2) The Secretary reallocates Federal capital contributions to 
institutions participating in the Federal Perkins Loan Program by--
    (i) Reallocating 80 percent of the total funds available in 
accordance with section 462(j) of the HEA; and
    (ii) Reallocating 20 percent of the total funds available in a 
manner that best carries out the purposes of the Federal Perkins Loan 
Program.
    (b) Allocation and reallocation of FWS funds. The Secretary 
allocates and reallocates funds to institutions participating in the FWS 
Program in accordance with section 442 of the HEA.
    (c) Allocation and reallocation of FSEOG funds. (1) The Secretary 
allocates funds to institutions participating in the FSEOG program in 
accordance with section 413D of the HEA.
    (2) The Secretary reallocates funds to institutions participating in 
the FSEOG Program in a manner that best carries out the purposes of the 
FSEOG Program.

[[Page 562]]

    (d) General allocation and reallocation--(1) Categories. As used in 
section 462 (Federal Perkins Loan Program), section 442 (FWS Program), 
and section 413D (FSEOG Program) of the HEA, ``Eligible institutions 
offering comparable programs of instruction'' means institutions that 
are being compared with the applicant institution and that fall within 
one of the following six categories:
    (i) Cosmetology.
    (ii) Business.
    (iii) Trade/Technical.
    (iv) Art Schools.
    (v) Other Proprietary Institutions.
    (vi) Non-Proprietary Institutions.
    (2) Payments to institutions. The Secretary allocates funds for a 
specific period of time. The Secretary provides an institution its 
allocation in accordance with the payment methods described in 34 CFR 
668.162.
    (3) Unexpended funds. (i) If an institution returns more than 10 
percent of its Federal Perkins Loan, FWS, or FSEOG allocation for an 
award year, the Secretary reduces the institution's allocation for that 
program for the second succeeding award year by the dollar amount 
returned.
    (ii) The Secretary may waive the provision of paragraph (d)(3)(i) of 
this section for a specific institution if the Secretary finds that 
enforcement would be contrary to the interests of the program.
    (iii) The Secretary considers enforcement of paragraph (d)(3)(i) of 
this section to be contrary to the interest of the program only if the 
institution returns more than 10 percent of its allocation due to 
circumstances beyond the institution's control that are not expected to 
recur.
    (e) Anticipated collections of Federal Perkins Loan funds. (1) For 
the purposes of calculating an institution's share of any excess 
allocation of Federal Perkins Loan funds, an institution's anticipated 
collections are equal to the amount that was collected by the 
institution during the second year preceding the beginning of the award 
period multiplied by 1.21.
    (2) The Secretary may waive the provision of paragraph (e)(1) of 
this section for any institution that has a cohort default rate that 
does not exceed 7.5 percent.
    (f) Authority to expend FWS funds. Except as specifically provided 
in 34 CFR 675.18 (b), (c), and (f), an institution may not use funds 
allocated or reallocated for an award year--
    (1) To meet FWS wage obligations incurred with regard to an award of 
FWS employment made for any other award year; or
    (2) To satisfy any other obligation incurred after the end of the 
designated award year.
    (g) Authority to expend FSEOG funds. Except as specifically provided 
in 34 CFR 668.164(g), an institution shall not use funds allocated or 
reallocated for an award year--
    (1) To make FSEOG disbursements to students in any other award year; 
or
    (2) To satisfy any other obligation incurred after the end of the 
designated award year.

(Authority: 20 U.S.C. 1070b-3 and 1087bb, 42 U.S.C. 2752)