of funds Funds received by institutions pursuant to this subsection shall, to maximum extent practicable, be used to compensate students employed in work-based learning positions. (3) Retained funds (A) Amount returned If an institution returns more than 10 percent of its allocation under paragraph (1), the institution’s allocation for the next fiscal year shall be reduced by the amount returned. (B) Waiver The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing this paragraph would be contrary to the interest of the program. (f) Filing deadlines The Secretary may require applications under this section, at such time, in such manner, and containing such information as the Secretary may require. . 4. Grants for Federal work-study programs (a) Amendments Section 443 of the Higher Education Act of 1965 ( 20 U.S.C. 1087–53 ) is amended— (1) in subsection (b)— (A) by amending paragraph (2) to read as follows: (2) provide that funds granted an institution of higher education pursuant to this section may only be used to make payments to students participating in work-study programs, except that an institution— (A) shall, beginning in fiscal year 2027— (i) use at least 3 percent of the total amount of funds granted to such institution under this section for such fiscal year to compensate students who have exceptional need (as defined in section 413C(c)(2)) and are employed in a work-based learning position during a qualified period of nonenrollment, as defined in subsection (f)