Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program, 78075-78086 [E6-22245]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 71, Number 249 (Thursday, December 28, 2006)]
[Rules and Regulations]
[Pages 78075-78086]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-22245]


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DEPARTMENT OF EDUCATION

34 CFR Parts 674, 682 and 685

RIN 1840-AC88


Federal Perkins Loan Program, Federal Family Education Loan 
Program, and William D. Ford Federal Direct Loan Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Interim final regulations, request for comments.

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SUMMARY: The Secretary is amending the Federal Perkins Loan (Perkins 
Loan) Program, Federal Family Education Loan (FFEL) Program, and 
William D. Ford Federal Direct Loan (Direct Loan) Program regulations 
to implement the changes to the Higher Education Act of 1965, as 
amended (HEA), resulting from the enactment of the Third Higher 
Education Extension Act of 2006 (THEEA), Public Law 109-292. These 
interim final regulations reflect the provisions of the THEEA that 
authorize the discharge of the outstanding balance of certain Perkins, 
FFEL, and Direct Loan Program loans for survivors of eligible public 
servants and other eligible victims of the September 11, 2001, 
terrorist attacks.

DATES: Effective Date: These interim final regulations are effective 
January 29, 2007.
    Comment date: The Department must receive any comments on or before 
January 29, 2007.
    Information collection compliance date: Affected parties do not 
have to comply with the information collection requirements in 
Sec. Sec.  674.64, 682.407, and 685.218 until the Department publishes 
in the Federal Register the control numbers assigned by the Office of 
Management and Budget (OMB) to these information collection 
requirements. Publication of the control numbers notifies the public 
that OMB has approved these information collection requirements under 
the Paperwork Reduction Act of 1995.

ADDRESSES: Address all comments about these interim final regulations 
to Mr. Brian Smith, U.S. Department of Education, 1990 K Street, NW., 
8th Floor, Washington, DC 20006. Telephone: (202) 502-7551 or via the 
Internet at: Brian.Smith@ed.gov.
    If you prefer to deliver your comments by hand or by using a 
courier service or commercial carrier, address your comments to: Mr. 
Brian Smith, 1990 K Street, NW., room 8082, Washington, DC 20006-8542.
    If you prefer to send your comments through the Internet, you may 
address them to us at: DischargeComments@ed.gov. Or you may send them 
to us at the U.S. Government Web site: https://www.regulations.gov. You 
must include the term ``Discharge Interim Final Comments'' in the 
subject line of your electronic message.

FOR FURTHER INFORMATION CONTACT: For provisions related to the FFEL and 
Federal Perkins Loan Programs: Mr. Brian Smith, U.S. Department of 
Education, 1990 K Street, NW., 8th Floor, Washington, DC 20006. 
Telephone: (202) 502-7551 or via the Internet at: Brian.Smith@ed.gov. 
For provisions related to the Federal Direct Loan Program: Mr. Jon Utz, 
U.S. Department of Education, Union Center Plaza, 830 First Street, 
NE., Washington, DC 20202-5345. Telephone: (202) 377-4008 or via the 
Internet at: Jon.Utz@ed.gov.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Relay Service (FRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: On September 30, 2006, Congress enacted the 
THEEA, Public Law 109-292. The changes made by the THEEA include:
     Restrictions on the use of eligible lender trustees by 
higher education institutions that make FFEL Loans. Under the THEEA, as 
of January 1, 2007, the FFEL lending activities of institutions of 
higher education and organizations affiliated with institutions of 
higher education through eligible lender trustee arrangements will be 
subject to certain restrictions that apply to institutions of higher 
education acting as lenders directly in the FFEL Program;
     New discharge provisions for Title IV, HEA student loans 
for the survivors

[[Page 78076]]

of eligible public servants and certain other eligible victims of the 
terrorist attacks on the United States on September 11, 2001;
     A technical modification to the HEA provision governing 
account maintenance fees that are paid to guaranty agencies in the FFEL 
Program; and
     Modifications to the requirements for an institution to 
receive a grant under the Hispanic Serving Institutions Program 
authorized by Title V of the HEA.
    These interim final regulations implement only the statutory 
changes in section 6 of the THEEA that establish new discharges in the 
Title IV, HEA student loan programs for the survivors of victims of the 
terrorist attacks on September 11, 2001.

Significant Regulations

Discharge of Student Loan Indebtedness for Survivors of Victims of the 
September 11, 2001, Attacks (Sec. Sec.  674.64, 682.407, and 685.218)

    Statute: Section 6 of the THEEA amended the HEA by authorizing the 
discharge of the obligation of a borrower to make further payments on 
an eligible Perkins, FFEL or Direct Loan if the borrower is a survivor 
of an eligible public servant or other eligible victim of the September 
11, 2001, terrorist attacks. The discharge is authorized only for a 
Perkins, FFEL or Direct Loan on which amounts were owed on September 
11, 2001, or Consolidation Loans incurred to pay off loan amounts that 
were owed on September 11, 2001. Amounts must still be owed on the loan 
on the day the discharge is requested. The THEEA does not authorize a 
refund of payments made by a borrower prior to the date the loan is 
discharged.
    Current Regulations: The current Perkins, FFEL, and Direct Loan 
Program regulations do not reflect the new loan discharge provisions 
for survivors of eligible public servants and other eligible victims of 
the September 11, 2001, terrorist attacks.
    New Regulations: New Sec. Sec.  674.64, 682.407, and 685.218 have 
been added to the Perkins, FFEL, and Direct Loan Program regulations, 
respectively, to reflect the THEEA provisions authorizing a loan 
discharge for survivors of eligible public servants and other eligible 
victims of the September 11, 2001, terrorist attacks.
    For the purpose of this new loan discharge, an eligible public 
servant is defined in the program regulations as an individual who 
served as a police officer, firefighter, other safety or rescue 
personnel, or as a member of the Armed Forces who died or became 
permanently and totally disabled due to injuries suffered in terrorist 
attacks on September 11, 2001. The term eligible victim is defined as 
an individual who died or became permanently and totally disabled due 
to injuries suffered in the terrorist attacks on September 11, 2001.
    The interim final regulations specify, consistent with section 6(b) 
of the THEEA, that the survivor of an eligible public servant can 
qualify for loan discharge, including the discharge of any portion of a 
joint Consolidation Loan that was used to repay the spouse's Title IV, 
student loan, only if the survivor is the spouse of the eligible public 
servant.
    The interim final regulations, consistent with section 6(b)(1)(B), 
(C), and (D) of the THEEA, also authorize loan discharge for spouses 
and eligible parents of eligible victims (other than public servants). 
An eligible parent is defined as the parent of an eligible victim if 
the parent owes a parent PLUS Loan incurred on behalf of that eligible 
victim, or owes a Consolidation Loan that repaid a parent PLUS Loan 
incurred on behalf of that eligible victim.
    For spouses of eligible victims other than eligible public 
servants, the interim final regulations provide, consistent with 
section 6(b)(1)(B) of the THEEA, for the discharge of the portion of a 
joint Consolidation Loan that was incurred on behalf of the eligible 
victim. To qualify for a discharge, in the case of a discharge based on 
the permanent and total disability of the eligible public servant or 
the eligible victim, the borrower and the public servant or victim must 
still be married. In the case of a discharge based on the death of the 
eligible public servant or eligible victim, the borrower must have been 
married to the public servant or the victim until the death of the 
public servant or the victim. For purposes of Federal law, the term 
``spouse'' is defined in 1 U.S.C. 7 and does not include an ex-spouse. 
Thus, the THEEA does not give the Secretary the authority to provide 
for a loan discharge for an ex-spouse.
    The interim final regulations also provide for the discharge of a 
parent borrower's PLUS Loan (or the portion of a Consolidation Loan 
that repaid a PLUS Loan) in the event of the death of the eligible 
victim on whose behalf the PLUS Loan was obtained. Finally, the interim 
final regulations provide for a discharge of a PLUS Loan (or the 
portion of a Consolidation Loan that repaid a PLUS Loan) obtained on 
behalf of an eligible victim who became permanently and totally 
disabled due to injuries suffered in the terrorist attacks on September 
11, 2001.
    As required by the THEEA, the interim final regulations establish 
procedures for filing applications for discharges by eligible 
borrowers. The interim final regulations provide that a borrower's 
eligibility for a loan discharge will be determined by the holder of 
the loan: The lender or guarantor for an FFEL Loan; the institution 
that made the loan for a Perkins Loan; and the Secretary for a Direct 
Loan. The borrower must use an application approved by the Secretary 
and provide the documentation required by the interim final 
regulations.
    The regulations require three types of documentation to support a 
claim that an individual is an eligible public servant or an eligible 
victim:
     Documentation of the individual's presence at one of the 
sites of the terrorist attacks on September 11, 2001;
     In the case of an eligible public servant, documentation 
of the individual's status as a public servant at the time of the 
attacks; and
     Documentation that the individual's death or permanent and 
total disability was a direct result of the attacks.
    Documentation of an individual's status as a public servant is 
provided by a certification from an authorized official that the 
borrower was a member of the Armed Forces, or was employed as a police 
officer, firefighter, or other safety or rescue personnel at one of the 
sites of the terrorist attacks on September 11. This certification is 
also used to document that the individual was present at one of the 
sites. For an eligible victim, a certification that the individual was 
present at one of the sites must be provided.
    Under the interim final regulations, documentation of the permanent 
and total disability of an eligible victim or an eligible public 
servant must include copies of contemporaneous medical records 
demonstrating that the victim was treated within 24 hours of the 
borrower sustaining the injury, or 24 hours of the borrower being 
rescued. The injury must have been sustained at the time or in the 
immediate aftermath of the attacks. In addition, the borrower must 
provide a certification from a physician that the borrower is 
permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001.
    Documentation of the death of an eligible victim or an eligible 
public servant is provided by the inclusion of the individual on an 
official list of individuals who died in the terrorist attacks on 
September 11, 2001. If the individual didn't die in the attacks, but 
died later as result of the attacks, documentation requirements include 
an

[[Page 78077]]

original or certified copy of the individual's death certificate, and a 
certification from a physician or medical examiner that the individual 
died due to injuries suffered in the terrorist attacks on September 11, 
2001.
    In some cases, substitutions for the documentation discussed above 
may be used. For example, documentation that an individual's Title IV 
loans were discharged due to death may be used in lieu of an original 
or certified copy of a death certificate.
    The documentation required by the interim final regulations is 
necessary to limit the discharge to individuals who meet the statutory 
eligibility criteria for the discharge. Contemporaneous medical records 
are necessary to ensure that the individual was injured in the 
terrorist attacks on September 11, 2001. A certification from a 
physician that the borrower is permanently and totally disabled as a 
result of that injury is necessary to ensure that the disability is a 
result of the terrorist attacks.
    Although the documentation requirements for the September 11 
survivor's discharge require eligibility of the public servant or the 
victim, the September 11 survivor's discharge under the THEEA is 
available only to the spouse or parent of the eligible public servant 
or the eligible victim. An eligible public servant or an eligible 
victim is not eligible for a loan discharge under these interim final 
regulations. A determination by a loan holder that an eligible public 
servant or an eligible victim is permanently and totally disabled for 
the purpose of discharging a spouse's or parent's loans does not 
qualify the eligible public servant or the eligible victim for a total 
and permanent disability discharge on his or her loans. To obtain a 
total and permanent disability discharge, an eligible public servant or 
an eligible victim must apply for a total and permanent disability 
discharge under the current procedures in Sec. Sec.  674.61, 682.402, 
685.212, and 685.213.
    Under those regulations, a borrower who qualifies for a discharge 
based on a total and permanent disability may be entitled to receive a 
refund of payments made after the date of disability. Consistent with 
section 6(e) of the THEEA, a discharge under the interim final 
regulations provides a discharge only of the outstanding balance of the 
loan and no refunds are authorized.
    In developing these interim final regulations, we relied on the 
definitions of immediate aftermath and present at the World Trade 
Center in New York City, New York, at the Pentagon in Virginia, or at 
the Shanksville, Pennsylvania site contained in the regulations 
promulgated to administer the September 11th Victim Compensation Fund 
of 2001 (the Fund). See 24 CFR Part 104; 66 FR 66273 (Dec. 21, 2001); 
67 FR 11233 (March 13, 2002). The documentation required to show that 
an eligible victim or public servant died or became permanently and 
totally disabled due to injuries suffered in the terrorist attacks on 
September 11, 2001 closely parallels the documentation required under 
the Fund regulations. The Fund was created under Title IV of the Air 
Transportation Safety and System Stabilization Act, Public Law 107-42, 
which authorized compensation to any individual (or the personal 
representative of a deceased individual) who was physically injured or 
killed as a result of the September 11, 2001 terrorist-related aircraft 
crashes. We determined that the Fund's regulations provided an 
appropriate basis for several of the new regulatory provisions 
resulting from the THEEA.

Waiver of Proposed Rulemaking

    Under the Administrative Procedure Act (5 U.S.C. 553), the 
Department is generally required to publish a notice of proposed 
rulemaking and provide the public with an opportunity to comment on 
proposed regulations prior to issuing a final rule. In addition, under 
section 492 of the HEA, all Department regulations for programs 
authorized under title IV of the HEA are subject to negotiated 
rulemaking requirements and under section 482 of the HEA, any title IV 
regulations that have not been published in final form by November 1 
prior to the start of an award year cannot become effective until the 
beginning of the second award year following the November 1 date.
    Section 6(f) of the THEEA provides that sections 482(c) and 492 of 
the HEA shall not apply to any regulations required to implement 
provisions of the THEEA that authorize the discharge of a title IV, HEA 
loan for survivors of victims of the September 11, 2001, attacks. The 
THEEA also requires that procedures for filing an application for loan 
discharge for survivors of the September 11, 2001, terrorist attacks be 
prescribed and published by regulation 90 days after the date of 
enactment or December 29, 2006, without regard to the rulemaking 
requirements of the APA. Therefore, the requirements for a proposed 
rule and negotiated rulemaking do not apply to these regulations.
    These regulations are final and in effect as published, thirty days 
after publication in the Federal Register. Although the Department is 
adopting these regulations on an interim final basis, the Department 
requests public comment on these regulations. After full consideration 
of public comments, the Secretary will publish final regulations with 
any necessary changes.

Executive Order 12866

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the OMB. 
Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action likely to result in a rule that may 
(1) have an annual effect on the economy of $100 million or more, or 
adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local or 
tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule); (2) create serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; (3) materially alter the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    Pursuant to the terms of the Executive Order, it has been 
determined this regulatory action will not have an annual effect on the 
economy of more than $100 million. We believe that approximately 1,000 
borrowers are eligible for a discharge on their loan under these 
provisions and that the costs incurred by the Department, lenders, and 
GAs to make the necessary systems changes to implement the discharge 
will approximate $1,350,000. Therefore, this action is not 
``economically significant'' and is not subject to OMB review under 
section 3(f)(1) of Executive Order 12866. However, this action is 
subject to OMB review under section 3(f)(4) of the Executive Order.

Need for Federal Regulatory Action

    These interim final regulations are needed to implement the 
provisions of the THEEA, which affects borrowers and other program 
participants in the Federal Perkins, FFEL and Federal Direct Loan 
Programs authorized under Title IV of the HEA.
    The Secretary has limited discretion in implementing these 
provisions. The changes included in these interim final regulations 
implement loan discharges

[[Page 78078]]

for the outstanding balance of certain Perkins, FFEL, and Direct Loan 
Program loans for survivors of eligible public servants and other 
eligible victims of the September 11, 2001 terrorist attacks.

Regulatory Flexibility Act Certification

    The Secretary certifies that these interim final regulations will 
not have a significant economic impact on a substantial number of small 
entities.

Paperwork Reduction Act of 1995

    Sections 674.64, 682.407 and 685.218 contain information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Department of Education is required to submit a 
copy of these sections to the OMB for its review. The burden associated 
with the above provisions is associated with forms and applications 
currently under development and will be approved for use under new OMB 
control numbers. The Department will develop new information collection 
packages for the following sections: Sec. Sec.  674.64, 682.407, and 
685.218.
    The Department will develop the application necessary to implement 
these provisions under an emergency clearance authorized by OMB. 
Information required by Sec. Sec.  674.64(c), 674.64(d), 682.407(d), 
682.407(e), 685.218(d), and 685.218(e) to determine eligibility for the 
discharge will be collected on this OMB-approved application. The 
information provided on the OMB-approved application will be collected 
and maintained by the holder of the borrower's loan. In the case of a 
FFEL loan, if the loan holder approves the discharge request the loan 
holder will provide the information collected to the guaranty agency 
that guaranteed the loan.
    The Department has submitted a full information collection package 
for OMB review to account for the burden associated with Sec. Sec.  
674.64, 682.407, and 685.218 concurrently with the publication of these 
interim final regulations. Accordingly, we invite comments on the 
burden hours associated with the information collection package for 
Sec. Sec.  674.64, 682.402, and 685.218 at this time.
    Collection of Information: Federal Perkins Loan Program; Federal 
Family Education Loan Program; and William D. Ford Federal Direct Loan 
Program.

Sections 674.64, 682.407 and 685.218--Discharge of a Federal Perkins, 
FFEL or Federal Direct Loan for Survivors of Eligible Public Servants 
and Other Eligible Victims of the September 11, 2001 Terrorist Attacks

    Under these interim final regulations, the Title IV, HEA loan 
program regulations are amended to authorize the discharge of the 
outstanding balance of certain Federal Perkins, FFEL, or Direct Loan 
Program loans for survivors of eligible public servants and other 
eligible victims of the September 11, 2001, terrorist attacks. The 
burden associated with the new requirements will be accounted for under 
a new OMB Control Number for a FFEL, Direct Loan, and Perkins Loan 
Discharge Application for September 11, 2001 Survivors. This form has 
been submitted for OMB review and approval by emergency clearance.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
20503; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the FOR FURTHER INFORMATION CONTACT section of this preamble.
    We consider your comments on these proposed collections of 
information in--
     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collection of 
information contained in these interim final regulations between 30 and 
60 days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication.

Assessment of Educational Impact

    Based on our own review, we have determined that these interim 
final regulations do not require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
https://www.ed.gov/news/fedregister
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: https://www.gpoaccess.gov/
nara/

(Catalog of Federal Domestic Assistance Numbers: 84.032 Federal 
Family Education Loan Program; 84.038 Federal Perkins Loan Program; 
84.268 William D. Ford Federal Direct Loan Program.)

List of Subjects in 34 CFR Parts 674, 682, and 685

    Administrative practice and procedure, Colleges and universities, 
Education, Loans program-education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

    Dated: December 22, 2006.
Margaret Spellings,
Secretary of Education.

0
For the reasons discussed in the preamble, the Secretary amends parts 
674, 682 and 685 of title 34 of the Code of Federal Regulations as 
follows:

PART 674--FEDERAL PERKINS LOAN PROGRAM

0
1. The authority citation for part 674 continues to read as follows:

    Authority: 20 U.S.C. 1087aa-1087hh and 20 U.S.C. 421-429, unless 
otherwise noted.


0
2. New Sec.  674.64 is added to read as follows:


Sec.  674.64  Discharge of student loan indebtedness for survivors of 
victims of the September 11, 2001, attacks.

    (a) Definition of terms. As used in this section--
    (1) Eligible public servant means an individual who--

[[Page 78079]]

    (i) Served as a police officer, firefighter, other safety or rescue 
personnel, or as a member of the Armed Forces; and
    (ii)(A) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001; or
    (B) Became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001.
    (2) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001 means the individual--
    (i) Was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001, and the individual died 
as a direct result of these crashes; or
    (ii) Died on board American Airlines flights 11 or 77 or United 
Airlines flights 93 or 175 on September 11, 2001.
    (3) Became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001 means the 
individual was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001, and the individual 
became permanently and totally disabled as a direct result of these 
crashes.
    (i) An individual is considered permanently and totally disabled 
if--
    (A) The disability is the result of a physical injury to the 
individual that was treated by a medical professional within 24 hours 
of the injury having been sustained or within 24 hours of the rescue;
    (B) The physical injury that caused the disability is verified by 
contemporaneous medical records created by or at the direction of the 
medical professional who provided the medical care; and
    (C) The individual is unable to work and earn money due to the 
disability and the disability is expected to continue indefinitely or 
result in death.
    (ii) If the injuries suffered due to the terrorist-related aircraft 
crashes did not make the individual permanently and totally disabled at 
the time of or in the immediate aftermath of the attacks, the 
individual may be considered to be permanently and totally disabled for 
purposes of this section if the individual's medical condition has 
deteriorated to the extent that the individual is permanently and 
totally disabled.
    (4) Immediate aftermath means, for an eligible public servant, the 
period of time from the aircraft crashes until 96 hours after the 
crashes.
    (5) Present at the World Trade Center in New York City, New York, 
at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site 
means physically present at the time of the terrorist-related aircraft 
crashes or in the immediate aftermath--
    (i) In the buildings or portions of the buildings that were 
destroyed as a result of the terrorist-related aircraft crashes; or
    (ii) In any area contiguous to the crash site that was sufficiently 
close to the site that there was a demonstrable risk of physical harm 
resulting from the impact of the aircraft or any subsequent fire, 
explosions, or building collapses. Generally, this includes the 
immediate area in which the impact occurred, fire occurred, portions of 
buildings fell, or debris fell upon and injured persons.
    (b) September 11 survivors discharge. (1) The obligation of a 
borrower to make any further payments on an eligible Defense, NDSL, or 
Perkins Loan is discharged if the borrower was, at the time of the 
terrorist attacks on September 11, 2001, and currently is, the spouse 
of an eligible public servant, unless the eligible public servant has 
died. If the eligible public servant has died, the borrower must have 
been the spouse of the eligible public servant at the time of the 
terrorist attacks on September 11, 2001 and until the date the eligible 
public servant died.
    (2) A Defense, NDSL, or Perkins Loan owed by the spouse of an 
eligible public servant may be discharged under the procedures for a 
discharge in paragraphs (b)(3) through (b)(6) of this section.
    (3) After being notified by the borrower that the borrower claims 
to qualify for a discharge under this section, an institution shall 
suspend collection activity on the borrower's eligible Defense, NDSL, 
and Perkins Loans and promptly request that the borrower submit a 
request for discharge on a form approved by the Secretary.
    (4) If the institution determines that the borrower does not 
qualify for a discharge under this section, or the institution does not 
receive the completed discharge request form from the borrower within 
60 days of the borrower notifying the institution that the borrower 
claims to qualify for a discharge, the institution shall resume 
collection and shall be deemed to have exercised forbearance of payment 
of both principal and interest from the date the institution was 
notified by the borrower. The institution must notify the borrower that 
the application for the discharge has been denied, provide the basis 
for the denial, and inform the borrower that the lender will resume 
collection on the loan.
    (5) If the institution determines that the borrower qualifies for a 
discharge under this section, the institution shall notify the borrower 
that the loan has been discharged and that there is no further 
obligation to repay the loan. The institution shall return to the 
sender any payments received by the institution after the date the loan 
was discharged.
    (6) A Defense, NDSL, or Perkins Loan owed by an eligible public 
servant may be discharged under the procedures in Sec.  674.61 for a 
discharge based on the death or total and permanent disability of the 
eligible public servant.
    (c) Documentation that an eligible public servant died due to 
injuries suffered in the terrorist attacks on September 11, 2001. (1) 
Documentation that an eligible public servant died due to injuries 
suffered in the terrorist attacks on September 11, 2001 must include--
    (i) A certification from an authorized official that the individual 
was a member of the Armed Forces, or was employed as a police officer, 
firefighter, or other safety or rescue personnel, and was present at 
the World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes; and
    (ii) The inclusion of the individual on an official list of the 
individuals who died in the terrorist attacks on September 11, 2001.
    (2) If the individual is not included on an official list of the 
individuals who died in the terrorist attacks on September 11, 2001, 
the borrower must provide--
    (i) The certification described in paragraph (c)(1)(i) of this 
section;
    (ii) An original or certified copy of the individual's death 
certificate; and
    (iii) A certification from a physician or a medical examiner that 
the individual died due to injuries suffered in the terrorist attacks 
on September 11, 2001.
    (3) If the individual owed a FFEL Program Loan, a Direct Loan, or a 
Perkins Loan at the time of the terrorist attacks on September 11, 
2001, documentation that the individual's loans were discharged by the 
lender, the Secretary, or the institution due to death may be 
substituted for the original or certified copy of a death certificate.
    (4) If the borrower is the spouse of an eligible public servant, 
and has been granted a discharge on a FFEL Program

[[Page 78080]]

Loan, a Direct Loan, or a Perkins Loan held by another institution, 
because the eligible public servant died due to injuries suffered in 
the terrorist attacks on September 11, 2001, documentation of the 
discharge may be used as an alternative to the documentation required 
in paragraphs (c)(1) through (c)(3) of this section.
    (5) Under exceptional circumstances and on a case-by-case basis, 
the determination that an eligible public servant died due to injuries 
suffered in the terrorist attacks on September 11, 2001 may be based on 
other reliable documentation approved by the chief financial officer of 
the institution.
    (d) Documentation that an eligible public servant became 
permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001.
    (1) Documentation that an eligible public servant became 
permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001 must include--
    (i) A certification from an authorized official that the individual 
was a member of the Armed Forces or was employed as a police officer, 
firefighter or other safety or rescue personnel, and was present at the 
World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes;
    (ii) Copies of contemporaneous medical records created by or at the 
direction of a medical professional who provided medical care to the 
individual within 24 hours of the injury having been sustained or 
within 24 hours of the rescue; and
    (iii) A certification by a physician, who is a doctor of medicine 
or osteopathy and legally authorized to practice in a state, that the 
individual became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001.
    (2) If the borrower is the spouse of an eligible public servant, 
and has been granted a discharge on a FFEL Loan, a Direct Loan, or a 
Perkins Loan held by another institution, because the eligible public 
servant became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001, documentation 
of the discharge may be used as an alternative to the documentation 
required in paragraph (d)(1) of this section.
    (e) Additional information. (1) An institution may require the 
borrower to submit additional information that the institution deems 
necessary to determine the borrower's eligibility for a discharge under 
this section.
    (2) To establish that the eligible public servant was present at 
the World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site, such additional 
information may include but is not limited to--
    (i) Records of employment;
    (ii) Contemporaneous records of a federal, state, city, or local 
government agency;
    (iii) An affidavit or declaration of the eligible public servant's 
employer; or
    (iv) A sworn statement (or an unsworn statement complying with 28 
U.S.C. 1746) regarding the presence of the eligible public servant at 
the site.
    (3) To establish that the disability of the eligible public servant 
is due to injuries suffered in the terrorist attacks on September 11, 
2001, such additional information may include but is not limited to--
    (i) Contemporaneous medical records of hospitals, clinics, 
physicians, or other licensed medical personnel;
    (ii) Registries maintained by federal, state, or local governments; 
or
    (iii) Records of all continuing medical treatment.
    (4) To establish the borrower's relationship to the eligible public 
servant, such additional information may include but is not limited 
to--
    (i) Copies of relevant legal records including court orders, 
letters of testamentary or similar documentation;
    (ii) Copies of wills, trusts, or other testamentary documents; or
    (iii) Copies of approved joint FFEL or Federal Direct Consolidation 
loan applications.
    (f) Limitations on discharge. (1) Only Defense, NDSL, and Perkins 
Loans for which amounts were owed on September 11, 2001, are eligible 
for discharge under this section.
    (2) Eligibility for a discharge under this section does not qualify 
a borrower for a refund of any payments made on the borrower's Defense, 
NDSL, or Perkins Loans prior to the date the loan was discharged.
    (3) A determination by an institution that an eligible public 
servant became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001 for purposes of 
this section does not qualify the eligible public servant for a 
discharge based on a total and permanent disability under Sec.  674.61.
    (4) The spouse of an eligible public servant may not receive a 
discharge under this section if the eligible public servant has been 
identified as a participant or conspirator in the terrorist-related 
aircraft crashes on September 11, 2001.

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

0
3. The authority citation for part 682 continues to read as follows:

    Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.


0
4. New Sec.  682.407 is added to read as follows:


Sec.  682.407  Discharge of student loan indebtedness for survivors of 
victims of the September 11, 2001, attacks.

    (a) Definition of terms. As used in this section--
    (1) Eligible public servant means an individual who--
    (i) Served as a police officer, firefighter, other safety or rescue 
personnel, or as a member of the Armed Forces; and
    (ii)(A) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001; or
    (B) Became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001.
    (2) Eligible victim means an individual who died due to injuries 
suffered in the terrorist attacks on September 11, 2001 or became 
permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001.
    (3) Eligible parent means the parent of an eligible victim if--
    (i) The parent owes a FFEL PLUS Loan incurred on behalf of an 
eligible victim; or
    (ii) The parent owes a FFEL Consolidation Loan that was used to 
repay a FFEL or Direct Loan PLUS Loan incurred on behalf of an eligible 
victim.
    (4) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001 means the individual--
    (i) Was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001, and the individual died 
as a direct result of these crashes; or
    (ii) Died on board American Airlines flights 11 or 77 or United 
Airlines flights 93 or 175 on September 11, 2001.
    (5) Became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001 means the 
individual was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of or in the immediate

[[Page 78081]]

aftermath of the terrorist-related aircraft crashes on September 11, 
2001 and the individual became permanently and totally disabled as a 
direct result of these crashes.
    (i) An individual is considered permanently and totally disabled 
if--
    (A) The disability is the result of a physical injury to the 
individual that was treated by a medical professional within 24 hours 
of the injury having been sustained or within 24 hours of the rescue;
    (B) The physical injury that caused the disability is verified by 
contemporaneous medical records created by or at the direction of the 
medical professional who provided the medical care; and
    (C) The individual is unable to work and earn money due to the 
disability and the disability is expected to continue indefinitely or 
result in death.
    (ii) If the injuries suffered due to the terrorist-related aircraft 
crashes did not make the individual permanently and totally disabled at 
the time of or in the immediate aftermath of the attacks, the 
individual may be considered to be permanently and totally disabled for 
purposes of this section if the individual's medical condition has 
deteriorated to the extent that the individual is permanently and 
totally disabled.
    (6) Immediate aftermath means, except in the case of an eligible 
public servant, the period of time from the aircraft crashes until 12 
hours after the crashes. With respect to eligible public servants, the 
immediate aftermath includes the period of time from the aircraft 
crashes until 96 hours after the crashes.
    (7) Present at the World Trade Center in New York City, New York, 
at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site 
means physically present at the time of the terrorist-related aircraft 
crashes or in the immediate aftermath--
    (i) In the buildings or portions of the buildings that were 
destroyed as a result of the terrorist-related aircraft crashes; or
    (ii) In any area contiguous to the crash site that was sufficiently 
close to the site that there was a demonstrable risk of physical harm 
resulting from the impact of the aircraft or any subsequent fire, 
explosions, or building collapses. Generally, this includes the 
immediate area in which the impact occurred, fire occurred, portions of 
buildings fell, or debris fell upon and injured persons.
    (b) September 11 survivors discharge. (1) The obligation of a 
borrower and any endorser to make any further payments on an eligible 
FFEL Program Loan is discharged if the borrower was, at the time of the 
terrorist attacks on September 11, 2001, and currently is, the spouse 
of an eligible public servant, unless the eligible public servant has 
died. If the eligible public servant has died, the borrower must have 
been the spouse of the eligible public servant at the time of the 
terrorist attacks on September 11, 2001 and until the date the eligible 
public servant died.
    (2) The obligation of a borrower to make any further payments 
towards the portion of a joint FFEL Consolidation Loan incurred on 
behalf of an eligible victim is discharged if the borrower was, at the 
time of the terrorist attacks on September 11, 2001, and currently is, 
the spouse of an eligible victim, unless the eligible victim has died. 
If the eligible victim has died, the borrower must have been the spouse 
of the eligible victim at the time of the terrorist attacks on 
September 11, 2001 and until the date the eligible victim died.
    (3) If the borrower is an eligible parent--
    (i) The obligation of a borrower and any endorser to make any 
further payments on a FFEL PLUS Loan incurred on behalf of an eligible 
victim is discharged.
    (ii) The obligation of the borrower to make any further payments 
towards the portion of a FFEL Consolidation Loan that repaid a FFEL or 
Direct Loan PLUS Loan incurred on behalf of an eligible victim is 
discharged.
    (c) Applying for discharge. (1) A FFEL Program Loan owed by the 
spouse of an eligible public servant or the spouse or parent of an 
eligible victim may be discharged under the procedures for a discharge 
in paragraphs (c)(2) through (c)(12) of this section.
    (2) After being notified by the borrower that the borrower claims 
to qualify for a discharge under this section, the lender shall suspend 
collection activity on the borrower's eligible FFEL Program Loan and 
promptly request that the borrower submit a request for discharge on a 
form approved by the Secretary.
    (3) If the lender determines that the borrower does not qualify for 
a discharge under this section, or the lender does not receive the 
completed discharge request form from the borrower within 60 days of 
the borrower notifying the lender that the borrower claims to qualify 
for a discharge, the lender shall resume collection and shall be deemed 
to have exercised forbearance of payment of both principal and interest 
from the date the lender was notified by the borrower. The lender must 
notify the borrower that the application for the discharge has been 
denied, provide the basis for the denial, and inform the borrower that 
the lender will resume collection on the loan. The lender may 
capitalize, in accordance with Sec.  682.202(b), any interest accrued 
and not paid during this period.
    (4) If the lender determines that the borrower qualifies for a 
discharge under this section, the lender shall provide the guaranty 
agency with the following documentation--
    (i) The original promissory note or a copy of the promissory note 
certified by the lender as true and exact;
    (ii) The loan application, if a separate loan application was 
provided to the lender; and
    (iii) The completed discharge form, and all accompanying 
documentation supporting the discharge request that formed the basis 
for the determination that the borrower qualifies for a discharge.
    (5) The lender must file a discharge claim within 60 days of the 
date on which the lender determines that the borrower qualifies for a 
discharge.
    (6) The guaranty agency must review a discharge claim under this 
section promptly.
    (7) If the guaranty agency determines that the borrower does not 
qualify for a discharge under this section, the guaranty agency must 
return the claim to the lender with an explanation of the basis for the 
agency's denial of the claim. Upon receipt of the returned claim, the 
lender must notify the borrower that the application for the discharge 
has been denied, provide the basis for the denial, and inform the 
borrower that the lender will resume collection on the loan. The lender 
is deemed to have exercised forbearance of both principal and interest 
from the date collection activity was suspended until the first payment 
due date. The lender may capitalize, in accordance with Sec.  
682.202(b), any interest accrued and not paid during this period.
    (8) If the guaranty agency determines that the borrower qualifies 
for a discharge, the guaranty agency pays the lender on an approved 
claim the amount of loss required under paragraph (c)(9) of this 
section. The guaranty agency shall pay the claim within the timeframe 
established for payment of disability claims in Sec.  
682.402(h)(1)(i)(B).
    (9) The amount of loss payable on a discharge claim is--
    (i) An amount equal to the sum of the remaining principal balance 
and interest accrued on the loan, unpaid collection costs incurred by 
the lender and applied to the borrower's account within 30 days of the 
date those costs were

[[Page 78082]]

actually incurred, and unpaid interest up to the date the lender should 
have filed the claim; or
    (ii) In the case of a partial discharge of a Consolidation Loan, 
the amount specified in paragraph (c)(9)(i) of this section for the 
portion of the Consolidation Loan incurred on behalf of the eligible 
victim.
    (10) After being notified that the guaranty agency has paid a 
discharge claim, the lender shall notify the borrower that the loan has 
been discharged or, in the case of a partial discharge of a 
Consolidation Loan, partially discharged. Except in the case of a 
partial discharge of a Consolidation Loan, the lender shall return to 
the sender any payments received by the lender after the date the 
guaranty agency paid the discharge claim.
    (11) The Secretary reimburses the guaranty agency for a discharge 
claim paid to the lender under this section after the agency pays the 
lender. Any failure by the lender to satisfy due diligence requirements 
prior to the filing of the claim that would have resulted in the loss 
of reinsurance on the loan in the event of default are waived by the 
Secretary, provided the loan was held by an eligible loan holder at all 
times.
    (12) Except in the case of a partial discharge of a Consolidation 
Loan, the guaranty agency shall promptly return to the sender any 
payment on a discharged loan made by the sender and received after the 
Secretary pays a discharge claim. At the same time that the agency 
returns the payment it shall notify the borrower that the loan has been 
discharged and that there is no further obligation to repay the loan.
    (13) A FFEL Program Loan owed by an eligible public servant or an 
eligible victim may be discharged under the procedures in Sec.  682.402 
for a discharge based on the death or total and permanent disability of 
the eligible public servant or eligible victim.
    (d) Documentation that an eligible public servant or eligible 
victim died due to injuries suffered in the terrorist attacks on 
September 11, 2001. (1) Documentation that an eligible public servant 
died due to injuries suffered in the terrorist attacks on September 11, 
2001 must include--
    (i) A certification from an authorized official that the individual 
was a member of the Armed Forces, or was employed as a police officer, 
firefighter, or other safety or rescue personnel, and was present at 
the World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes; and
    (ii) The inclusion of the individual on an official list of the 
individuals who died in the terrorist attacks on September 11, 2001.
    (2) If the individual is not included on an official list of the 
individuals who died in the terrorist attacks on September 11, 2001, 
the borrower must provide--
    (i) The certification described in paragraph (d)(1)(i) of this 
section;
    (ii) An original or certified copy of the individual's death 
certificate; and
    (iii) A certification from a physician or a medical examiner that 
the individual died due to injuries suffered in the terrorist attacks 
on September 11, 2001.
    (3) If the individual owed a FFEL Program Loan, a Direct Loan, or a 
Perkins Loan at the time of the terrorist attacks, documentation that 
the individual's loans were discharged by the lender, the Secretary, or 
the institution due to death may be substituted for the original or 
certified copy of a death certificate.
    (4) Documentation that an eligible victim died due to injuries 
suffered in the terrorist attacks on September 11, 2001 is the 
inclusion of the individual on an official list of the individuals who 
died in the terrorist attacks on September 11, 2001.
    (5) If the eligible victim is not included on an official list of 
the individuals who died in the terrorist attacks on September 11, 
2001, the borrower must provide--
    (i) The documentation described in paragraphs (d)(2)(ii), 
(d)(2)(iii), and (d)(3) of this section; and
    (ii) A certification signed by the borrower that the eligible 
victim was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of the terrorist-related aircraft crashes or in the 
immediate aftermath of these crashes.
    (6) If the borrower is the spouse of an eligible public servant, 
and has been granted a discharge on a Perkins Loan, a Direct Loan, or a 
FFEL Program Loan held by another FFEL lender because the eligible 
public servant died due to injuries suffered in the terrorist attacks 
on September 11, 2001, documentation of the discharge may be used as an 
alternative to the documentation in paragraphs (d)(1) through (d)(3) of 
this section.
    (7) If the borrower is the spouse or parent of an eligible victim, 
and has been granted a discharge on a Direct Loan or on a FFEL Program 
Loan held by another FFEL lender because the eligible victim died due 
to injuries suffered in the terrorist attacks on September 11, 2001, 
documentation of the discharge may be used as an alternative to the 
documentation in paragraphs (d)(4) and (d)(5) of this section.
    (8) Under exceptional circumstances and on a case-by-case basis, 
the determination that an eligible public servant or an eligible victim 
died due to injuries suffered in the terrorist attacks on September 11, 
2001 may be based on other reliable documentation approved by the chief 
executive officer of the guaranty agency.
    (e) Documentation that an eligible public servant or eligible 
victim became permanently and totally disabled due to injuries suffered 
in the terrorist attacks on September 11, 2001. (1) Documentation that 
an eligible public servant became permanently and totally disabled due 
to injuries suffered in the terrorist attacks on September 11, 2001 
must include--
    (i) A certification from an authorized official that the individual 
was a member of the Armed Forces or was employed as a police officer, 
firefighter or other safety or rescue personnel, and was present at the 
World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes;
    (ii) Copies of contemporaneous medical records created by or at the 
direction of a medical professional who provided medical care to the 
individual within 24 hours of the injury having been sustained or 
within 24 hours of the rescue; and
    (iii) A certification by a physician, who is a doctor of medicine 
or osteopathy and legally authorized to practice in a state, that the 
individual became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001.
    (2) Documentation that an eligible victim became permanently and 
totally disabled due to injuries suffered in the terrorist attacks on 
September 11, 2001 must include--
    (i) The documentation described in paragraphs (e)(1)(ii) and 
(e)(1)(iii) of this section; and
    (ii) A certification that the eligible victim was present at the 
World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes.

[[Page 78083]]

    (3) If the borrower is the spouse of an eligible public servant, 
and has been granted a discharge on a Perkins Loan, a Direct Loan, or a 
FFEL Program Loan held by another FFEL lender because the eligible 
public servant became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001, documentation 
of the discharge may be used as an alternative to the documentation in 
paragraph (e)(1) of this section.
    (4) If the borrower is the spouse or parent of an eligible victim, 
and has been granted a discharge on a Direct Loan or on a FFEL Program 
Loan held by another FFEL lender because the eligible victim became 
permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001, documentation of the discharge 
may be used as an alternative to the documentation in paragraph (e)(2) 
of this section.
    (f) Additional information. (1) A lender or guaranty agency may 
require the borrower to submit additional information that the lender 
or guaranty agency deems necessary to determine the borrower's 
eligibility for a discharge under this section.
    (2) To establish that the eligible public servant or eligible 
victim was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site, such additional information may include but is not limited to--
    (i) Records of employment;
    (ii) Contemporaneous records of a federal, state, city, or local 
government agency;
    (iii) An affidavit or declaration of the eligible public servant's 
or eligible victim's employer; and
    (iv) A sworn statement (or an unsworn statement complying with 28 
U.S.C. 1746) regarding the presence of the eligible public servant or 
eligible victim at the site.
    (3) To establish that the disability of the eligible public servant 
or eligible victim is due to injuries suffered in the terrorist attacks 
on September 11, 2001, such additional information may include but is 
not limited to--
    (i) Contemporaneous medical records of hospitals, clinics, 
physicians, or other licensed medical personnel;
    (ii) Registries maintained by federal, state, or local governments; 
or
    (iii) Records of all continuing medical treatment.
    (4) To establish the borrower's relationship to the eligible public 
servant or eligible victim, such additional information may include but 
is not limited to--
    (i) Copies of relevant legal records including court orders, 
letters of testamentary or similar documentation;
    (ii) Copies of wills, trusts, or other testamentary documents; or
    (iii) Copies of approved joint Consolidation Loan applications or 
approved FFEL or Direct Loan PLUS loan applications.
    (g) Limitations on discharge. (1) Only Federal SLS Loans, Federal 
Stafford Loans, Federal PLUS Loans, and Federal Consolidation Loans for 
which amounts were owed on September 11, 2001, or Federal Consolidation 
Loans incurred to pay off loan amounts that were owed on September 11, 
2001, are eligible for discharge under this section.
    (2) Eligibility for a discharge under this section does not qualify 
a borrower for a refund of any payments made on the borrower's loan 
prior to the date the loan was discharged.
    (3) A determination by a lender or a guaranty agency that an 
eligible public servant or an eligible victim became permanently and 
totally disabled due to injuries suffered in the terrorist attacks on 
September 11, 2001 for purposes of this section does not qualify the 
eligible public servant or the eligible victim for a discharge based on 
a total and permanent disability under Sec.  682.402.
    (4) The spouse of an eligible public servant or eligible victim may 
not receive a discharge under this section if the eligible public 
servant or eligible victim has been identified as a participant or 
conspirator in the terrorist-related aircraft crashes on September 11, 
2001. An eligible parent may not receive a discharge on a FFEL PLUS 
Loan or on a Consolidation Loan that was used to repay a FFEL or Direct 
Loan PLUS Loan incurred on behalf of an individual who has been 
identified as a participant or conspirator in the terrorist-related 
aircraft crashes on September 11, 2001.

PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

0
5. The authority citation for part 685 continues to read as follows:

    Authority: 20 U.S.C. 1087a et seq., unless otherwise noted.


0
6. Section 685.212 is amended by adding a new paragraph (i) to read as 
follows:


Sec.  685.212  Discharge of a loan obligation.

* * * * *
    (i) September 11 survivors discharge. If a borrower meets the 
requirements in Sec.  685.218, the Secretary discharges the obligation 
of the borrower and any endorser to make any further payments--
    (1) On an eligible Direct Loan if the borrower qualifies as the 
spouse of an eligible public servant;
    (2) On the portion of a joint Direct Consolidation Loan incurred on 
behalf of an eligible victim, if the borrower qualifies as the spouse 
of an eligible victim;
    (3) On a Direct PLUS Loan incurred on behalf of an eligible victim 
if the borrower qualifies as an eligible parent; and
    (4) On the portion of a Direct Consolidation Loan that repaid a 
PLUS loan incurred on behalf of an eligible victim, if the borrower 
qualifies as an eligible parent.


0
7. New Sec.  685.218 is added to read as follows:


Sec.  685.218  Discharge of student loan indebtedness for survivors of 
victims of the September 11, 2001, attacks.

    (a) Definition of terms. As used in this section--
    (1) Eligible public servant means an individual who--
    (i) Served as a police officer, firefighter, other safety or rescue 
personnel, or as a member of the Armed Forces; and
    (ii)(A) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001; or
    (B) Became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001.
    (2) Eligible victim means an individual who died due to injuries 
suffered in the terrorist attacks on September 11, 2001 or became 
permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001.
    (3) Eligible parent means the parent of an eligible victim if--
    (i) The parent owes a Direct PLUS Loan incurred on behalf of an 
eligible victim; or
    (ii) The parent owes a Direct Consolidation Loan that was used to 
repay a Direct PLUS Loan or a FFEL PLUS Loan incurred on behalf of an 
eligible victim.
    (4) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001 means the individual--
    (i) Was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001 and the individual died 
as a direct result of these crashes; or
    (ii) Died on board American Airlines flights 11 or 77 or United 
Airlines flights 93 or 175 on September 11, 2001.

[[Page 78084]]

    (5) Became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001 means the 
individual was present at the World Trade Center in New York City, New 
York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania 
site at the time of or in the immediate aftermath of the terrorist-
related aircraft crashes on September 11, 2001 and the individual 
became permanently and totally disabled as a direct result of these 
crashes.
    (i) An individual is considered permanently and totally disabled 
if--
    (A) The disability is the result of a physical injury to the 
individual that was treated by a medical professional within 24 hours 
of the injury having been sustained or within 24 hours of the rescue;
    (B) The physical injury that caused the disability is verified by 
contemporaneous medical records created by or at the direction of the 
medical professional who provided the medical care; and
    (C) The individual is unable to work and earn money