Description: Tags: 0727200005

Thursday,
July 27, 2000
Part V
Department of
Education
34 CFR Parts 682 and 685
Federal Family Education Loan Program
and William D. Ford Federal Direct Loan
Program; Proposed Rule
VerDate 11<MAY>2000 13:37 Jul 26, 2000 Jkt 190000 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\27JYP4.SGM pfrm03 PsN: 27JYP4
46316 Federal Register / Vol. 65, No. 145 / Thursday, July 27, 2000 / Proposed Rules
DEPARTMENT OF EDUCATION To ensure that your comments have and San Francisco. Four half-day
maximum effect in developing the final sessions were held on September 13 and
34 CFR Parts 682 and 685 regulations, we urge you to identify 14, 1999, in Washington, DC. In
RIN 1845–AA16 clearly the specific section or sections of addition, we held three regional
the proposed regulations that each of sessions in Atlanta on September 17, in
Federal Family Education Loan (FFEL) your comments addresses and to arrange Chicago on September 24, and in San
Program and William D. Ford Federal your comments in the same order as the Francisco on September 27, 1999. The
Direct Loan Program proposed regulations. Office of Student Financial Assistance’s
We invite you to assist us in
AGENCY: Office of Postsecondary
Customer Service Task Force also
complying with the specific
Education, Education. conducted listening sessions to obtain
requirements of Executive Order 12866
and its overall requirement of reducing public involvement in the development
ACTION: Notice of proposed rulemaking.
regulatory burden that might result from of our regulations.
SUMMARY: The Secretary proposes to these proposed regulations. Please let us We then published a notice in the
amend the Federal Family Education know of any further opportunities we Federal Register (64 FR 73458,
Loan (FFEL) Program regulations and should take to reduce potential costs or December 30, 1999) to announce our
the William D. Ford Federal Direct Loan increase potential benefits while intention to establish two negotiated
(Direct Loan) Program regulations. The preserving the effective and efficient rulemaking committees to draft
Secretary is amending these regulations administration of the programs. proposed regulations affecting Title IV
to reduce administrative burden for During and after the comment period, of the HEA. The notice requested
program participants, provide benefits you may inspect all public comments nominations for participants from
to borrowers, and protect the taxpayers’ about these proposed regulations in anyone who believed that his or her
interests. room 3045, ROB–3, 7th and D Streets, organization or group should participate
DATES: We must receive your comments SW., Washington, DC, between the
in this negotiated rulemaking process.
on or before September 11, 2000. hours of 8:30 a.m. and 4 p.m., Eastern
The notice announced that we would
ADDRESSES: Address all comments about time, Monday through Friday of each
week except Federal holidays. select participants for the process from
these proposed regulations to Ms. the nominees of those organizations or
Pamela A. Moran, U.S. Department of Assistance to Individuals With groups. The notice also announced a
Education, P.O. Box 23272, Washington, Disabilities in Reviewing the tentative list of issues that each
DC 20026–3272. If you prefer to send Rulemaking Record committee would negotiate.
your comments through the Internet,
use the following address: On request, we will supply an Once the two committees were
ffelnprm@ed.gov. appropriate aid, such as a reader or established, they met to develop
You must include the term ‘‘Team 1 print magnifier, to an individual with a proposed regulations over the course of
FFEL’’ in the subject line of your disability who needs assistance to several months, beginning in February.
electronic message. review the comments or other The proposed regulations contained in
If you want to comment on the documents in the public rulemaking this NPRM reflect the final consensus of
information collection requirements, record for these proposed regulations. If
Negotiating Committee I (committee),
you must send your comments to the you want to schedule an appointment
which was made up of the following
Office of Management and Budget at the for this type of aid, you may call (202)
205–8113 or (202) 260–9895. If you use members:
address listed in the Paperwork • American Association of Collegiate
Reduction Act section of this preamble. a TDD, you may call the Federal
Information Relay Service at 1–800– Registrars and Admissions Officers
You may also send a copy of these • American Association of Cosmetology
comments to the Department 877–8339.
Schools
representative named in this section. Negotiated Rulemaking • American Association of State Colleges and
FOR FURTHER INFORMATION CONTACT: For Section 492 of the Higher Education Universities (in coalition with American
the FFEL Program, Mr. George Harris, or Act of 1965, as amended (HEA) requires Association of Community Colleges)
for the Direct Loan Program, Mr. Jon that, before publishing any proposed • American Council on Education
Utz; U.S. Department of Education, 400 regulations for programs under Title IV • Career College Association
Maryland Avenue, SW., room 3045, of the HEA, the Secretary obtain public • Coalition of Higher Education Assistance
ROB–3, Washington, DC 20202–5449. involvement in the development of the Organizations
Telephone: (202) 708–8242. If you use a proposed regulations. After obtaining • Consumer Bankers Association
telecommunications device for the deaf advice and recommendations, the • Education Finance Council
(TDD) you may call the Federal Secretary must conduct a negotiated • Education Loan Management Resources
Information Relay Service (FIRS) at 1– rulemaking process to develop the • Legal Services
800–877–8339. proposed regulations. All published • National Association of College and
Individuals with disabilities may proposed regulations must conform to University Business Officers
obtain this document in an alternative agreements resulting from the • National Association of Independent
format (e.g., Braille, large print, Colleges and Universities
negotiated rulemaking process unless
audiotape, or computer diskette) on • National Association of State Universities
the Secretary reopens the negotiated
request to the contact person listed and Land-Grant Colleges
rulemaking process or provides a
under FOR FURTHER INFORMATION • National Association of Student Financial
written explanation to the participants
CONTACT. Aid Administrators
in that process why the Secretary has
• National Association of Student Loan
SUPPLEMENTARY INFORMATION: decided to depart from the agreements.
Administrators
To obtain public involvement in the
Invitation To Comment • National Council of Higher Education Loan
development of the proposed
Programs
We invite you to submit comments regulations, we held listening sessions
• National Direct Student Loan Coalition
regarding these proposed regulations. in Washington, DC, Atlanta, Chicago,
Federal Register / Vol. 65, No. 145 / Thursday, July 27, 2000 / Proposed Rules 46317
• Sallie Mae, Inc. and not to borrowers who apply for an benefits, is based on the understanding
• Student Loan Servicing Alliance initial period of unemployment that borrowers may not immediately
• The College Fund/United Negro College deferment or to those borrowers who begin a job search on the date they
Fund
qualify based on their eligibility for become unemployed. However, it means
• United States Department of Education
• United States Student Association unemployment benefits. These changes that, unlike in other cases, the borrower
• US Public Interest Research Group will allow loan holders to accept is able to get a deferment without
As stated in the committee protocols, alternative documentation that provides proving that he or she meets all the
consensus means that there must be no sufficient information to support a conditions for the deferment.
dissent by any member in order for the borrower’s claim that he or she is In light of this situation, the
committee to be considered to have seeking employment as required. No committee decided to retain the 6-
reached agreement. Consensus was change to the Direct Loan regulations is month retroactive limit for an
reached on all of the proposed needed because the explicit unemployment deferment that was
unemployment deferment rules are not granted based on an ongoing search for
regulations in this document.
included in the Direct Loan regulations. employment. The Secretary believes the
Significant Proposed Regulations Instead, unemployment deferments in integrity of the FFEL and Direct Loan
We discuss substantive issues under the Direct Loan Program are granted programs would be jeopardized if there
the sections of the proposed regulations using the same provisions that exist in was no retroactive limit for granting this
to which they pertain. Generally, we do the FFEL unemployment deferment kind of unemployment deferment.
not address proposed regulatory regulations.
Reasons: On October 29, 1999 (64 FR Several of the non-federal negotiators
provisions that are technical or also proposed to modify the types of
otherwise minor in effect. The proposed 58622), the Department eliminated the
6-month limitation for retroactive documentation required from a
regulations address changes that are borrower to show that he or she had
specific to the FFEL Program and application of a deferment for the in-
school deferment only. During this conducted a diligent search for
changes that are common to both the employment. The committee discussed
year’s negotiated rulemaking, the
FFEL and Direct Loan programs. situations in which job announcements
committee agreed to make the deferment
FFEL and Direct Loan Program Changes rules more consistent for borrowers and do not specify some or most of the
for the parties that administer the FFEL information required under current
Sections 682.210 and 685.204— regulations, such as the name of the
Program by removing the 6-month
Deferment employer, or the name and title of the
limitation from all other deferment
Current Regulations: In the FFEL and categories except the unemployment person to be contacted. In response to
Direct Loan programs, the current deferment. these concerns, the committee agreed to
regulations and policy provide that, The 6-month limitation on propose regulations that include less
except in the case of an in-school retroactively granting deferments was prescriptive language so that borrowers
deferment, a deferment may not be intended, in part, to motivate borrowers could provide various forms of
granted for a period beginning more to make timely deferment requests and employment contact documentation
than 6 months before the date the lender provide the necessary deferment acceptable to the loan holder.
(or the Department on a Direct Loan) documentation. However, the
receives the request and the Sections 682.210(s)(6) and
committee concluded that the limitation
documentation required for the 685.204(b)(3)—Economic Hardship
does not serve that purpose. Instead, the
deferment. limitation causes confusion and Deferment
For a borrower who requests an complexity for borrowers. Moreover, the Statute: Section 435(o)(1) of the HEA
unemployment deferment on the basis limitation reduces the usefulness of uses the borrower’s ‘‘adjusted gross
of providing documentation of employer deferments for borrowers who are income’’ as the income measurement to
contacts, current regulations require the delinquent on payments and are trying determine if a borrower would have an
name of the employer contacted, the to avoid default. The 6-month limitation economic hardship in repaying a loan,
employer’s address and telephone means that the application of a but also authorizes the Department to
number, and the name or title of the deferment to which the borrower is establish additional criteria.
person contacted. entitled might still leave the borrower
Proposed Regulations: Proposed significantly delinquent. We hope the Current Regulations: Current
§ 682.210(a)(5) would remove the 6- elimination of this limitation will allow regulations only refer to the borrower’s
month limitation from all deferment loan holders to better assist borrowers to total monthly gross income in
categories except for the unemployment avoid default. identifying the income that is used
deferment. No change to the Direct Loan The committee considered removing when determining a borrower’s
regulations is needed because the the 6-month limitation on retroactive eligibility for an economic hardship
explicit 6-month limitation is not application of the unemployment deferment.
included in the Direct Loan regulations deferment but decided not to do so. Proposed Regulations: The committee
and only applies to Direct Loans Under the current regulations, agreed that the regulations should be
through a cross-reference to the FFEL (including the rule that the deferment modified to incorporate the adjusted
deferment regulations. may not begin earlier than 6 months gross income standard included in the
The proposed regulations would also before the date the lender receives the HEA. Accordingly, in these proposed
modify the requirement that loan borrower’s deferment request) a regulations, § 682.210(s)(6) would be
holders obtain specific documentation borrower can be granted an initial revised so that a borrower could qualify
of employment contact from borrowers period of unemployment deferment for an economic hardship deferment
who request an unemployment without documenting a search for full- based on either his or her monthly gross
deferment. These requirements only time employment. This provision, income from all sources, or a monthly
apply to borrowers who request unique to the unemployment deferment amount calculated as one-twelfth of the
continuations of their deferments based for borrowers who do not qualify based borrower’s adjusted gross income, as
on their attempts to get employment, on their eligibility for unemployment recorded on the borrower’s most
recently filed Federal income tax return. discharge regulations. The Court of FFEL Changes
No change to the Direct Loan Appeals found that section 437(c) of the
Section 682.410—Fiscal,
regulations is needed because the Direct HEA does not authorize us to include Administrative, and Enforcement
Loan regulations implement the criteria in the regulations that attempt to Requirements
statutory requirements through a cross- measure whether, despite any deficient
reference to the FFEL economic ATB certification, the student Current Regulations: In collecting on
hardship deferment regulations. nevertheless had the ability to benefit defaulted loans, a guaranty agency
Reasons: The committee noted that from the training offered by the school. currently must follow the regulatory
section 435(o)(1)(B) of the HEA used The Court concluded that a student’s requirements contained in § 682.410(b).
‘‘adjusted gross income’’ when referring post-training employment experience is Those regulations state, with a great
to a borrower’s income. It was agreed irrelevant to the truth or falsity of the amount of specificity, precisely when
that the regulations should add the certification. Rather, the Court ruled certain collection activities must occur
statutory standard to the regulations that the HEA only authorizes us to in collecting a defaulted loan. They also
while retaining the existing regulatory determine whether the school properly restrict a guaranty agency’s use of
standard to provide greater flexibility litigation in collecting defaulted loans.
tested the student and the student
for any borrower to document his or her The collection rules in current
passed the test. We have decided to
income. The committee believed that § 682.410(b) were developed when
extend the Court’s ruling to all
some borrowers found it difficult to guaranty agencies used Federal money
borrowers, not just those covered by the
document their total monthly income to pay for their collection activities and
Court’s ruling. Thus, we will no longer
from all sources, as is required under were designed to require certain
consider the student’s employment or collection activities while ensuring the
current § 682.210(s)(6)(x). The
employment attempts in resolving false proper use of Federal funds.
committee believed that a borrower
certification discharge claims. Proposed Regulations: We would
should be given the option of using the
adjusted gross income amount from the We (or a guaranty agency) generally no longer require a guaranty
borrower’s most recent Federal income occasionally learn of information that agency to perform routine collection
tax return as a simplified way to strongly suggests that all borrowers in a activities (collection letters and
demonstrate that he or she qualifies for certain category would likely qualify for telephone calls) within the specific time
an economic hardship deferment. a false certification discharge. For periods, prescribed in the current
example, we might determine that all regulations. The guaranty agency could
Sections 682.402 and 685.214—False students at a specific school during a develop its own collection strategy, as
Certification Discharge long as, for a non-paying borrower, the
certain time period had incorrect ATB
Current Regulations: The FFEL and determinations. In the interest of guaranty agency performed at least one
Direct Loan regulations on false assisting those borrowers, (many of activity every 180 days to collect the
certification discharges have the same whom may be unaware of the possibility debt, locate the borrower (if necessary),
rules with respect to a discharge based of receiving a loan discharge), the or determine if the borrower has the
on an improper determination of the committee decided that it would be means to repay the debt. The proposed
student’s ability-to-benefit (ATB). Under appropriate to discharge those loans regulations would also eliminate the
those rules, if a valid ATB without an individual discharge request general prohibition against a guaranty
determination was not made, the from each borrower. On October 29, agency suing borrowers who owe
borrower can qualify for a false 1999 (64 FR 58622), we issued defaulted loans. The proposed
certification loan discharge if the regulations that authorized the granting regulations would permit a guaranty
student is unable to obtain employment of closed school loan discharges in agency to file a civil suit against a
in the occupation for which the training certain cases without individual borrower to compel repayment if the
was intended, or if the student finds a requests from each borrower. These borrower had no garnishable wages or
job only after receiving training that was proposed regulations would extend that the guaranty agency determined that the
not provided by the school that certified approach to false certification borrower had sufficient attachable assets
the borrower’s loan application. Current or non-garnishable income that could be
discharges.
regulations in both programs require used to repay the debt, and the use of
borrowers who want a false certification During the negotiations, the litigation would be more effective in
discharge to file an application for the committee agreed that a borrower collection of the debt.
discharge. should be able to receive a false The proposed regulations would
Proposed Regulations: With regard to certification discharge based on an require a guaranty agency to undertake
a false certification discharge based invalid ATB determination, even if the a small number of required activities
upon an ATB issue, all requirements school was not directly involved in the and borrower notifications that the
related to a student’s employment after invalid testing or other determination of committee believed would protect
leaving school are being removed from the student’s ATB because the invalid borrowers and comply with other
the FFEL and Direct Loan regulations. In testing was done by an independent test applicable laws. The proposed
addition, for both programs, the administrator. Although we believed regulations would require that, within
proposed rules would permit an ATB that this was consistent with the current 45 days after paying a lender’s default
false certification discharge to be regulations, to avoid potential claim, the guaranty agency must send a
granted without an application if it is confusion, we agreed to remove the notice advising the borrower that a
determined that the borrower qualifies words ‘‘the school’s’’ in the reference to default claim has been paid and that the
based on information in the possession invalid testing of a student’s ATB in borrower has an opportunity to enter
of the Secretary or guaranty agency. § 682.402(e)(3)(ii) and § 685.214(c)(1). into a repayment agreement with the
Reasons: On November 16, 1999, the The committee agreed that the guaranty agency and to request an
U.S. Court of Appeals for the District of regulatory language that would remain administrative review of the status of
Columbia, in Jordan v. Riley (99–5024), after that deletion was sufficient to the debt. In addition, the guaranty
ruled invalid the employment attempt apply to all invalid ATB determinations agency must notify the borrower that he
provisions in the false certification made, regardless of who made them. or she may have certain legal rights in
the collection of debts, and that the Proposed Regulations: The length of deferments. The proposed regulations
borrower may wish to contact a time a guaranty agency must retain also provide additional flexibility by
counselor or lawyer regarding those required loan records for loans paid in permitting false certification discharges
rights. The guaranty agency must also full by the borrower would be reduced without an application for qualified
warn the borrower that it may: (1) from 5 years to 3 years from the date the borrowers on the basis of information
Report the default to credit bureaus (if loan is repaid in full by the borrower. possessed by the guaranty agency or the
it does so, the guaranty agency must For all other loans for which a guaranty Secretary. Further flexibility is provided
notify the borrower of that action and agency receives payment in full from to guaranty agencies by proposed
that the borrower’s credit rating may any other source (for example, payoff of changes that simplify collection
thereby have been damaged); (2) assess a loan by a consolidation loan), or for requirements by making them less
collection costs against the borrower; (3) those loans that are not paid in full, the prescriptive, and reduce the required
administratively garnish the borrower’s 5-year retention period would continue retention of records from 5 years to 3
wages; (4) file a civil suit to compel to be in effect. In particular cases, we years for loans fully repaid by
repayment; (5) offset the borrower’s could require a guaranty agency to borrowers.
State and Federal income tax refunds retain records beyond the 3-year or 5-
2. Clarity of the Regulations
and other payments made by the year minimum periods.
Federal Government to the borrower; (6) Reasons: On October 29, 1999 (64 FR Executive Order 12866 and the
assign the loan to the Secretary in 58622), we issued regulations that President’s Memorandum of June 1,
accordance with § 682.409; and (7) take generally reduced record retention 1998 on ‘‘Plain Language in Government
other lawful collection means to collect requirements for lenders in the FFEL Writing’’ require each agency to write
the debt, at the discretion of the Program from 5 years to 3 years from the regulations that are easy to understand.
guaranty agency. date the loan is repaid in full by the The Secretary invites comments on
Reasons: As a result of changes made borrower. Several non-federal how to make these proposed regulations
to the HEA in 1998, a guaranty agency negotiators involved in this year’s easier to understand, including answers
now pays for collection activities on negotiated rulemaking session proposed to questions such as the following:
defaulted loans with money in its a similar reduction in guaranty agency • Are the requirements in the
‘‘Operating Fund,’’ which is the record retention requirements for proposed regulations clearly stated?
property of the guaranty agency. Thus, defaulted loans paid in full by • Do the proposed regulations contain
guaranty agencies now have strong borrowers as a result of guaranty agency technical terms or other wording that
financial incentives to collect defaults collection efforts. The committee interferes with their clarity?
generally agreed that reducing the • Does the format of the proposed
in a cost effective manner. A guaranty
record retention period to 3 years in regulations (grouping and order of
agency that is an effective collector of
these limited cases would not diminish sections, use of headings, paragraphing,
defaulted loans will be financially better
program integrity and borrower etc.) aid or reduce their clarity?
off than one that is an ineffective • Would the proposed regulations be
collector. The committee believed that protections, and would greatly reduce
the costs of maintaining records for this easier to understand if we divided them
these financial incentives eliminate the into more (but shorter) sections? (A
need for the prescriptive collection portion of the guaranty agency’s
portfolio. ‘‘section’’ is preceded by the symbol
activities found in the current ‘‘§ ’’ and a numbered heading; for
regulations (other than the borrower Executive Order 12866 example, § 682.210 Deferment.)
protection provisions discussed under • Could the description of the
‘‘proposed regulations’’). The current 1. Potential Costs and Benefits
proposed regulations in the
sequence of required phone calls and Under Executive Order 12866, we SUPPLEMENTARY INFORMATION section of
letters, and the general restrictions have assessed the potential costs and this preamble be more helpful in
against litigation, served a purpose benefits of this regulatory action. making the proposed regulations easier
when guaranty agencies funded their The potential costs associated with to understand? If so, how?
collection efforts with Federal Reserve the proposed regulations are those • What else could we do to make the
Fund money. The new financing resulting from statutory requirements proposed regulations easier to
structure for guaranty agencies created and those we have determined as understand?
by the 1998 Amendments to the HEA necessary for administering these Send any comments that concern how
reduced the need for those prescriptive programs effectively and efficiently. the Department could make these
regulations. Elsewhere in this SUPPLEMENTARY proposed regulations easier to
Guaranty agencies have frequently INFORMATION section we identify and understand to the person listed in the
expressed the view that they could do explain burdens specifically associated ADDRESSES section of the preamble.
a better job in collecting defaults if they with information collection
were free to develop their own Regulatory Flexibility Act Certification
requirements. See the heading
collection strategies unhindered by the Paperwork Reduction Act of 1995. The Secretary certifies that these
current default due diligence rules. The In assessing the potential costs and proposed regulations would not have a
proposed regulations would give the benefits—both quantitative and significant economic impact on a
agencies that flexibility. qualitative—of this regulatory action, substantial number of small entities.
we have determined that the benefits These proposed regulations would affect
Section 682.414—Records, Reports, and
would justify the costs. guaranty agencies and lenders that
Inspection Requirements for Guaranty
participate in the FFEL Program, as well
Agency Programs. Summary of Potential Costs and as individual FFEL and Direct Loan
Current Regulations: Guaranty Benefits borrowers. The U.S. Small Business
agencies generally are required to These proposed regulations benefit Administration Size Standards define
maintain records for 5 years after a loan borrowers and institutions by institutions as ‘‘small entities’’ if they
has been paid in full or determined to simplifying and providing additional are for-profit or nonprofit institutions
be uncollectible. flexibility in administering loan with total annual revenue below
$5,000,000 or if they are institutions qualifies for a discharge based on • Enhancing the quality, usefulness,
controlled by governmental entities information in the Secretary’s or and clarity of the information we
with populations below 50,000. guaranty agency’s possession. In these collect; and
The 36 guaranty agencies are State cases, the borrower would not need to • Minimizing the burden on those
and private nonprofit entities that act as submit a false certification loan who must respond. This includes
agents of the Federal government, and discharge application to receive a exploring the use of appropriate
as such are not considered ‘‘small discharge. Included in this category automated, electronic, mechanical, or
entities’’ for this purpose. Individual would be FFEL borrowers who have other technological collection
FFEL and Direct Loan borrowers also received false certification discharges of techniques or other forms of information
are not considered ‘‘small entities’’ their Federal Direct Loans based on the technology; e.g., permitting electronic
under the Regulatory and Flexibility same qualifying conditions, and Direct submission of responses.
Act. A number of the over 4,000 lenders Loan borrowers who have received the OMB is required to make a decision
participating in the FFEL Program meet same discharges of their FFEL loans. concerning the collections of
the definition of ‘‘small entities.’’ The The total burden hour reduction (based information contained in these
Secretary has determined that the on approximately 30 minutes per proposed regulations between 30 and 60
proposed regulations will not have a application) is not expected to be days after publication of this document
significant economic impact on these substantial because of the small number in the Federal Register. Therefore, to
lenders. of borrowers who would not be required ensure that OMB gives your comments
The Secretary invites comments on to submit a false certification loan full consideration, it is important that
this determination, and welcomes discharge application. OMB receives the comments within 30
proposals on any significant alternatives Collection of Information: Reduction days of publication. This does not affect
that would satisfy the same legal and in the length of time a guaranty agency the deadline for your comments to us on
policy objectives of these proposals must retain loan records. the proposed regulations.
while minimizing the economic impact These proposed regulations would
on small entities. Intergovernmental Review
affect all FFEL guaranty agencies by
Paperwork Reduction Act of 1995 reducing the length of time a guaranty The FFEL Program and the William D.
agency must retain required loan Ford Federal Direct Loan Program are
Sections 682.210, 682.402, 682.414, not subject to Executive Order 12372
685.204, and 685.214 contain records for loans paid in full by the
borrower from 5 years to 3 years from and the regulations in 34 CFR part 79.
information collection requirements.
Under the Paperwork Reduction Act of the date the loan is repaid in full by the Assessment of Educational Impact
1995 (44 U.S.C. 3507(d)), the borrower. For all other loans for which
the guaranty agency receives payment in The Secretary particularly requests
Department of Education has submitted comments on whether these proposed
a copy of these sections to the Office of full from any other source (for example,
payoff of a loan by a consolidation regulations would require transmission
Management and Budget (OMB) for its of information that any other agency or
review. loan), or for those loans that are not paid
in full, the 5-year retention period will authority of the United States gathers or
Collection of Information: Federal makes available.
Family Education Loan Program and continue to be in effect, except that in
William D. Ford Federal Direct Loan particular cases, the Secretary may Electronic Access to This Document
Program. Deferment documentation require the retention of records beyond
You may view this document in text
requirements. the 3-year or 5-year minimum periods.
or Adobe Portable Document Format
These proposed regulations would The total burden hour reduction is not
(PDF) on the Internet at the following
affect the potential ability of borrowers expected to be substantial because most
sites:
to qualify for an economic hardship of the burden in record retention is
associated with the initial assembling http://ocfo.ed.gov/fedreg.htm
deferment. A borrower could qualify for http://ifap.ed.gov/csb_html/fedlreg.htm
an economic hardship deferment based and transfer of records to a retention
on one-twelfth of the borrower’s system. To use the PDF, you must have the
adjusted gross income, as recorded on If you want to comment on the Adobe Acrobat Reader Program with
the borrower’s most recently filed information collection requirements, Search, which is available free at the
Federal income tax return, instead of the please send your comments to the Office first of the previous sites. If you have
borrower’s total monthly gross income of Information and Regulatory Affairs, questions about using the PDF, call the
as under current regulations. The total OMB, room 10235, New Executive U.S. Government Printing Office (GPO),
burden hour reduction (based on Office Building, Washington, DC 20503; toll free, at 1–888–293–6498; or in the
approximately 6 minutes per Attention: Desk Officer for U.S. Washington, D.C. area at (202) 512–
application) is not expected to be Department of Education. You may also 1530.
substantial because of the small number send a copy of these comments to the Note: The official version of this document
Department representative named in the is the document published in the Federal
of borrowers who would choose this
ADDRESSES section of this preamble. Register. Free Internet access to the official
option. edition of the Federal Register and the Code
Collection of Information: Federal We consider your comments on these
of Federal Regulations is available on GPO
Family Education Loan Program and proposed collections of information in— Access at: http://www.access.gpo.gov/nara/
William D. Ford Federal Direct Loan • Deciding whether the proposed index.html.
Program. False certification discharge of collections are necessary for the proper (Catalog of Federal Domestic Assistance
a borrower’s loan obligation without an performance of our functions, including Number 84.032 Federal Family Education
application form. whether the information will have Loan Program)
These proposed regulations would practical use;
affect the potential loan discharge for • Evaluating the accuracy of our List of Subjects in 34 CFR Parts 682 and
borrowers if the Secretary or the estimate of the burden of the proposed 685
guaranty agency, with the Secretary’s collections, including the validity of our Administrative practice and
permission, determines that a borrower methodology and assumptions; procedure, Colleges and universities,
Education, Loan programs—education, (s) * * * paragraph (e)(3)(ii)(B), removing the

Reporting and recordkeeping (6) * * * word ‘‘and’’ after the semi-colon.
requirements, Student aid, Vocational * * * * * C. Removing paragraph (e)(3)(ii)(C).
education. (iii) Is working full-time and has a D. Revising paragraph (e)(13)(ii)(A).
Dated: July 19, 2000. monthly income that does not exceed E. Revising paragraph (e)(13)(ii)(B)
Richard W. Riley,
the greater of (as calculated on a introductory text.
monthly basis)— F. In paragraph (e)(13)(ii)(B)(2),
Secretary of Education.
(A) The minimum wage rate described removing the word ‘‘or’’ that appears
For the reasons discussed in the in section 6 of the Fair Labor Standards after the semi-colon.
preamble, the Secretary proposes to Act of 1938; or G. In paragraph (e)(13)(ii)(C),
amend parts 682 and 685 of Title 34 of (B) An amount equal to 100 percent removing the period and adding in its
the Code of Federal Regulations as of the poverty line for a family of two, place, ‘‘; or’’.
follows: as determined in accordance with H. Adding a new paragraph
section 673(2) of the Community (e)(13)(ii)(D).
PART 682—FEDERAL FAMILY Services Block Grant Act.
EDUCATION LOAN (FFEL) PROGRAM I. Adding a new paragraph (e)(14).
(iv) Is working full-time and has a The additions and revisions read as
1. The authority citation for part 682 Federal education debt burden that follows:
continues to read as follows: equals or exceeds 20 percent of the
borrower’s monthly income, and that § 682.402 Death, disability, closed school,
Authority: 20 U.S.C. 1071 to 1087–2, false certification, unpaid refunds, and
income, minus the borrower’s Federal
unless otherwise noted. bankruptcy payments.
education debt burden, is less than 220
2. Section 682.210 is amended by: percent of the amount described in * * * * *
A. Revising paragraph (a)(5). paragraph (s)(6)(iii) of this section. (e) * * *
B. Revising paragraph (h)(2)(i). (v) Is not working full-time and has a (13) * * *
C. Removing the words ‘‘of up to one monthly income that— (ii) * * *
year at a time’’ from paragraph (s)(6) (A) Does not exceed twice the amount (A) For periods of enrollment
introductory text. described in paragraph (s)(6)(iii) of this beginning prior to July 1, 1987, was
D. Revising paragraphs (s)(6)(iii), (iv), section; and determined by the school to have the
(v), (ix), and (x). (B) After deducting an amount equal ability to benefit from the school’s
The revisions read as follows: to the borrower’s Federal education debt training in accordance with the
§ 682.210 Deferment.
burden, the remaining amount of the requirements of 34 CFR 668.6, as in
borrower’s income does not exceed the existence at the time the determination
(a) * * * amount described in paragraph (s)(6)(iii)
(5) An authorized deferment period was made;
of this section. (B) For periods of enrollment
begins on the date that the holder
determines is the date that the condition * * * * * beginning between July 1, 1987 and
entitling the borrower to the deferment (ix) To qualify for a subsequent period June 30, 1996, achieved a passing grade
first existed, except that an initial of deferment that begins less than one on a test—
unemployment deferment as described year after the end of a period of * * * * *
in paragraph (h)(2) of this section deferment under paragraphs (s)(6)(iii) (D) For periods of enrollment
cannot begin more than 6 months before through (v) of this section, the lender beginning on or after July 1, 1996—
the date the holder receives a request must require the borrower to submit (1) Has a high school diploma or its
and documentation required for the evidence showing— recognized equivalent;
(A) The amount of the borrower’s (2) Has obtained within 12 months
deferment.
most recent monthly income or a copy before the date the student initially
* * * * * of the borrower’s most recently filed
(h) * * * receives title IV, HEA program
Federal income tax return; and assistance, a passing score specified by
(2) * * * (B) For periods of deferment under
(i) Describing the borrower’s diligent the Secretary on an independently
paragraphs (s)(6)(iv) and (v) of this
search for full-time employment during administered test in accordance with
section, evidence that would enable the
the preceding 6 months, except that a subpart J of 34 CFR part 668; or
lender to determine the amount of the
borrower requesting an initial period of (3) Is enrolled in an eligible
monthly payments to all other entities
unemployment deferment, which may institution that participates in a State
for Federal postsecondary education
not exceed 6 months prospectively, is process approved by the Secretary
loans that would have been owed by the
not required to describe his or her under subpart J of 34 CFR part 668.
borrower during the deferment period.
search for full-time employment. To (x) For purposes of paragraph (s)(6) of * * * * *
continue an unemployment deferment, this section, a borrower’s monthly (14) Discharge without an application.
the borrower’s written certification must income is the gross amount of income A borrower’s obligation to repay all or
include information showing that the received by the borrower from a portion of an FFEL Program loan may
borrower made at least six diligent employment and from other sources, or be discharged without an application
attempts to secure employment to one-twelfth of the borrower’s adjusted from the borrower if the Secretary, or
support the period covered by the gross income, as recorded on the the guaranty agency with the Secretary’s
certification. This information could be borrower’s most recently filed Federal permission, determines that the
the name of the employer contacted and income tax return. borrower qualifies for a discharge based
the employer’s address and telephone * * * * * on information in the Secretary or
number, or other information acceptable 3. Section 682.402 is amended by: guaranty agency’s possession.
to the holder showing that the borrower A. In paragraph (e)(3)(ii), removing * * * * *
made six diligent attempts to obtain the words ‘‘the school’s’’. 4. Section 682.406 is amended by
full-time employment; B. In paragraph (e)(3)(ii)(A) adding the revising paragraph (a)(11) to read as
* * * * * word ‘‘and’’ after the semicolon, and in follows:
§ 682.406 Conditions for claim payments activities on a loan on which it pays a contact counselors or lawyers regarding
from the Federal Fund and for reinsurance default claim filed by a lender. For a those rights.
coverage. non-paying borrower, the agency must (vi) Within a reasonable time after all
(a) * * * perform at least one activity every 180 of the information described in
(11) The agency exercised due days to collect the debt, locate the paragraph (b)(6)(v) of this section has
diligence in collection of the loan in borrower (if necessary), or determine if been sent, the agency must send at least
accordance with § 682.410(b)(6). the borrower has the means to repay the one notice informing the borrower that
* * * * * debt. the default has been reported to all
5. Section 682.410 is amended by: (ii) A guaranty agency must attempt national credit bureaus (if that is the
A. Amending paragraph (b)(5)(i) an annual Federal offset against all case) and that the borrower’s credit
introductory text by removing the eligible borrowers. If an agency initiates rating may thereby have been damaged.
reference to paragraph ‘‘(b)(6)(iii)’’ and proceedings to offset a borrower’s State * * * * *
adding in its place ‘‘(b)(6)(v)’’. and Federal income tax refunds and 6. Section 682.414 is amended by
B. Amending paragraph (b)(5)(ii) other payments made by the Federal revising paragraph (a)(2) to read as
introductory text by removing the Government to the borrower, it may not follows:
reference to paragraph ‘‘(b)(6)(ii)’’ and initiate those proceedings sooner than
adding in its place ‘‘(b)(6)(v)’’. 60 days after sending the notice § 682.414 Records, reports, and inspection
C. Revising paragraph (b)(6). described in paragraph (b)(5)(ii)(A) of requirements for guaranty agency
D. Removing paragraph (b)(7). programs.
E. Redesignating paragraphs (b)(8) this section.
(iii) A guaranty agency must initiate (a) * * *
through (b)(11) as paragraphs (b)(7) (2) A guaranty agency must retain the
through (b)(10), respectively. administrative wage garnishment
proceedings against all eligible records required for each loan for not
F. Amending redesignated paragraph
borrowers, except as provided in less than 3 years following the date the
(b)(7)(ii) by removing the reference to
paragraph (b)(6)(iv) of this section, by loan is repaid in full by the borrower,
paragraph ‘‘(b)(8)(i)’’ and adding in its
following the procedures described in or for not less than 5 years following the
place ‘‘(b)(7)(i)’’.
G. Amending redesignated paragraph paragraph (b)(9) of this section. date the agency receives payment in full
(b)(7)(ii)(D) by removing the reference to (iv) A guaranty agency may file a civil from any other source. However, in
paragraph ‘‘(b)(6)(i)’’ and adding in its suit against a borrower to compel particular cases, the Secretary may
place ‘‘(b)(6)’’. repayment only if the borrower has no require the retention of records beyond
H. Amending redesignated paragraph wages that can be garnished under this minimum period.
(b)(8) by removing the reference to paragraph (b)(9) of this section, or the * * * * *
paragraphs ‘‘(b)(2), (5), (6), and (7)’’ and agency determines that the borrower has
adding in its place ‘‘(b)(2), (5), and (6)’’. sufficient attachable assets or income PART 685—WILLIAM D. FORD
I. Amending redesignated paragraph that is not subject to administrative FEDERAL DIRECT LOAN PROGRAM
(b)(9)(i)(E) by removing the references to wage garnishment that can be used to 7. The authority citation for part 685
paragraphs ‘‘(b)(10)(i)(D)’’ and repay the debt, and the use of litigation continues to read as follows:
‘‘(b)(10)(i)(J)’’ and adding in their place would be more effective in collection of
‘‘(b)(9)(i)(D)’’ and ‘‘(b)(9)(i)(J)’’, the debt. Authority: 20 U.S.C. 1087 et seq., unless
otherwise noted.
respectively. (v) Within 45 days after paying a
J. Amending redesignated paragraph lender’s default claim, the agency must 8. Section 685.214 is amended by:
(b)(9)(i)(F) by removing the reference to send a notice to the borrower that A. Removing the words ‘‘the school’s’’
paragraph ‘‘(b)(10)(i)(H)’’ and adding in contains the information described in in paragraph (c)(1).
its place ‘‘(b)(9)(i)(H)’’. paragraph (b)(5)(ii) of this section. B. Adding the word ‘‘and’’ after the
K. Amending redesignated paragraph During this time period, the agency also semicolon at the end of paragraph
(b)(9)(i)(I) by removing the reference to must notify the borrower, either in the (c)(1)(i).
paragraph ‘‘(b)(10)(i)(H)’’ and adding in notice containing the information C. Removing ‘‘; and’’ at the end of
its place ‘‘(b)(9)(i)(H)’’. described in paragraph (b)(5)(ii) of this paragraph (c)(1)(ii) and adding, in its
L. Amending redesignated paragraph section, or in a separate notice, that if place, a period.
(b)(9)(i)(K) by removing both references he or she does not make repayment D. Removing paragraph (c)(1)(iii).
to paragraph ‘‘(b)(10)(i)(B)’’ and adding arrangements acceptable to the agency, E. Adding a new paragraph (c)(6).
in their place ‘‘(b)(9)(i)(B)’’. the agency will promptly initiate The revisions read as follows:
M. Amending redesignated paragraph procedures to collect the debt. The
(b)(9)(i)(L) by removing both references agency’s notification to the borrower § 685.214 Discharge for false certification
to paragraph ‘‘(b)(10)(i)(B)’’ and adding of student eligibility or unauthorized
must state that the agency may payment.
in their place ‘‘(b)(9)(i)(B)’’. administratively garnish the borrower’s
N. Amending redesignated paragraph wages, file a civil suit to compel * * * * *
(b)(10)(ii) by removing the reference to repayment, offset the borrower’s State (c) * * *
‘‘§ 682.410(b)(11)(i)’’ and adding in its and Federal income tax refunds and (6) Discharge without an application.
place ‘‘§ 682.410(b)(10)(i)’’. other payments made by the Federal The Secretary may discharge a loan
The revisions read as follows: under this section without an
Government to the borrower, assign the
loan to the Secretary in accordance with application from the borrower if the
§ 682.410 Fiscal, administrative, and
enforcement requirements. § 682.409, and take other lawful Secretary determines, based on
collection means to collect the debt, at information in the Secretary’s
* * * * * possession, that the borrower qualifies
(b) * * * the discretion of the agency. The
agency’s notification must include a for a discharge.
(6) Collection efforts on defaulted
loans. statement that borrowers may have * * * * *
(i) A guaranty agency must engage in certain legal rights in the collection of [FR Doc. 00–18953 Filed 7–26–00; 8:45 am]
reasonable and documented collection debts, and that borrowers may wish to BILLING CODE 4000–01–U

Description: Tags: 0727200005

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Description: Tags: 0727200005

Încărcat de

Drepturi de autor:

Formate disponibile

Thursday,

July 27, 2000

Education, Loan programs—education, (s) * * * paragraph (e)(3)(ii)(B), removing the

S-ar putea să vă placă și