Federal Family Education Loan Program (FFELP), 2518-2564 [E9-712]
Download as PDF
<![CDATA[
2518
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
DEPARTMENT OF EDUCATION
Submission for OMB Review;
Comment Request
Department of Education.
The Director, Information
Collection Clearance Division,
Regulatory Information Management
Services, Office of Management, invites
comments on the submission for OMB
review as required by the Paperwork
Reduction Act of 1995.
DATES: Interested persons are invited to
submit comments on or before February
17, 2009.
ADDRESSES: Written comments should
be addressed to the Office of
Information and Regulatory Affairs,
Attention: Education Desk Officer,
Office of Management and Budget, 725
17th Street, NW., Room 10222, New
Executive Office Building, Washington,
DC 20503 or faxed to (202) 395–6974.
SUPPLEMENTARY INFORMATION: Section
3506 of the Paperwork Reduction Act of
1995 (44 U.S.C. Chapter 35) requires
that the Office of Management and
Budget (OMB) provide interested
Federal agencies and the public an early
opportunity to comment on information
collection requests. OMB may amend or
waive the requirement for public
consultation to the extent that public
participation in the approval process
would defeat the purpose of the
information collection, violate State or
Federal law, or substantially interfere
with any agency’s ability to perform its
statutory obligations. The IC Clearance
Official, Regulatory Information
Management Services, Office of
Management, publishes that notice
containing proposed information
collection requests prior to submission
of these requests to OMB. Each
proposed information collection,
grouped by office, contains the
following: (1) Type of review requested,
e.g. new, revision, extension, existing or
reinstatement; (2) Title; (3) Summary of
the collection; (4) Description of the
need for, and proposed use of, the
information; (5) Respondents and
frequency of collection; and (6)
Reporting and/or Recordkeeping
burden. OMB invites public comment.
AGENCY:
SUMMARY:
[FR Doc. E9–805 Filed 1–14–09; 8:45 am]
BILLING CODE 4000–01–P
DEPARTMENT OF EDUCATION
DEPARTMENT OF THE TREASURY
OFFICE OF MANAGEMENT AND
BUDGET
Federal Family Education Loan
Program (FFELP)
Institute of Education Sciences
AGENCY: Department of Education,
Department of the Treasury, Office of
Management and Budget.
ACTION: Notice of terms and conditions
of additional purchase of loans under
the Ensuring Continued Access to
Student Loans Act of 2008.
Type of Review: Revision.
Title: Early Childhood Longitudinal
Study Kindergarten Class of 2010–2011.
Frequency: Annually.
SUMMARY: Under the authority of section
459A of the Higher Education Act of
1965, as amended (‘‘HEA’’), as enacted
by the Ensuring Continued Access to
Dated: January 12, 2009.
Angela C. Arrington,
IC Clearance Official, Regulatory Information
Management Services, Office of Management.
jlentini on PROD1PC65 with NOTICES
Affected Public: Individuals or
household.
Reporting and Recordkeeping Hour
Burden:
Responses: 164,869.
Burden Hours: 101,055.
Abstract: The ECLS–K 2010–2011 is
the follow-up study to the ECLS–K. It is
a longitudinal study that will follow
children from kindergarten through fifth
grade to measure child development,
school readiness and early school
experiences. It will include cognitive
assessments of children on an annual
basis, parent interviews, and surveys of
teachers, school administrators and the
primary care provider.
Requests for copies of the information
collection submission for OMB review
may be accessed from https://
edicsweb.ed.gov, by selecting the
‘‘Browse Pending Collections’’ link and
by clicking on link number 3872. When
you access the information collection,
click on ‘‘Download Attachments’’ to
view. Written requests for information
should be addressed to U.S. Department
of Education, 400 Maryland Avenue,
SW., LBJ, Washington, DC 20202–4537.
Requests may also be electronically
mailed to the Internet address
ICDocketMgr@ed.gov or faxed to (202)
401–0920. Please specify the complete
title of the information collection when
making your request.
Comments regarding burden and/or
the collection activity requirements
should be electronically mailed to
ICDocketMgr@ed.gov. Individuals who
use a telecommunications device for the
deaf (TDD) may call the Federal
Information Relay Service (FIRS) at 1–
800–877–8339.
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00011
Fmt 4703
Sfmt 4703
Student Loans Act of 2008 (Pub. L. 110–
227) and amended by Public Law 110–
315 and Public Law 110–350, the
Department of Education
(‘‘Department’’) may purchase, or enter
into forward commitments to purchase,
Federal Family Education Loan Program
(‘‘FFELP’’) loans made under sections
428 (subsidized Stafford loans), 428B
(PLUS loans), or 428H (unsubsidized
Stafford loans) of the HEA, on such
terms as the Secretary of Education
(‘‘Secretary’’), the Secretary of the
Treasury, and the Director of the Office
of Management and Budget
(collectively, ‘‘Secretaries and Director’’)
jointly determine are ‘‘in the best
interest of the United States’’ and ‘‘shall
not result in any net cost to the Federal
Government (including the cost of
servicing the loans purchased).’’
This notice establishes the terms and
conditions that will govern certain loan
purchases made under section 459A of
the HEA, as extended by Public Law
110–350, including (a) purchases from
an asset-backed commercial paper
vehicle referred to as an ‘‘ABCP
Conduit’’ or ‘‘Conduit’’ (‘‘ABCP Conduit
Program’’) and (b) replication for the
2009–2010 academic year of the Loan
Participation Purchase Program (‘‘2009–
2010 Participation Program’’) and Loan
Purchase Commitment Program (‘‘2009–
2010 Purchase Program’’) (collectively,
‘‘Programs’’).
This notice also outlines the
Department’s methodology and factors
that have been considered in evaluating
the price at which the Department will
purchase these additional FFELP loans;
and describes how the use of those
factors and methodology will ensure
that the additional loan purchases do
not result in any net cost to the Federal
Government. The Secretaries and
Director concur in the publication of
this notice and have jointly determined
that, based on the Department’s
analysis, the purchase of additional
loans as described in this notice is in the
best interest of the United States and
shall not result in any net cost to the
Federal Government (including the cost
of servicing the loans purchased).
DATES: Effective Date: The terms and
conditions governing the purchase of
loans under the 2009–2010 Participation
Program and Purchase Program, and the
ABCP Conduit Program are effective
January 16, 2009.
FOR FURTHER INFORMATION CONTACT: U.S.
Department of Education, Office of
Federal Student Aid, Union Center
Plaza, 830 First Street, NE., room 111G3,
Washington, DC 20202. Telephone:
(202) 377–4401 or by e-mail:
ffel.agreementprocess@ed.gov.
E:\FR\FM\15JAN1.SGM
15JAN1
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
If you use a telecommunications
device for the deaf (TDD), call the
Federal Relay Service (FRS), toll free, at
1–800–877–8339. Individuals with
disabilities can obtain this document in
an accessible format (e.g. , braille, large
print, audiotape, or computer diskette)
on request to the office listed under FOR
FURTHER INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION:
jlentini on PROD1PC65 with NOTICES
Introduction
The Department’s purchase of FFELP
loans is intended primarily to ensure
that students and parents continue to
have access to FFELP loans for the
remainder of the 2008–2009 academic
year and for the 2009–2010 academic
year.
The Department of Education first
exercised its authority under section
459A of the HEA in July 2008, when the
Secretaries and Director established the
Participation Program and Purchase
Program for eligible loans made for
academic year 2008–2009.1
Under the Participation Program, the
Department has purchased participation
interests in eligible loans that are held
by an eligible lender acting as a sponsor
under a Master Participation Agreement.
Under the Purchase Program, the
Department has purchased eligible loans
that are held by eligible lenders. To
participate in either the Participation
Program or the Purchase Program, a
lender must enter into an agreement
with the Department for that program.
Subsequent to the announcements of
the Purchase Program and Participation
Program in July, the Secretary of
Education concluded that additional
action was necessary to ensure students
and parents have access to FFELP for
the remainder of the 2008–2009
academic year. Specifically, the
Secretaries and Director acknowledged
the possibility that some lenders would
not be able to obtain capital to make
second disbursements of 2008–2009
academic year FFELP loans even for the
short-term necessary before lenders can
utilize the ABCP Conduit Program. To
provide needed liquidity to support new
lending, the Department, through the
Short-term Purchase Program
announced in December 2008, extended
the offer to purchase loans to include
eligible loans made for the 2007–2008
academic year. The Department at that
time gave notice that it would purchase
such loans beginning on or about
1 The Secretaries and Director announced the
terms and conditions governing the Participation
Program and the Purchase Program for academic
year 2008–2009 in a notice published in the Federal
Register on July 1, 2008 (73 FR 37422). Minor
revisions to this notice were published in the
Federal Register on July 17, 2008 (73 FR 41048).
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
December 1, 2008 and would continue
purchasing them through February 28,
2009 or the date on which one or more
conforming Asset-Backed Commercial
Paper (ABCP) Conduits for purchasing
FFELP loans become operational,
whichever occurs earlier. Through the
Short-term Purchase Program, the
Department will expend up to $500
million to purchase eligible loans each
week during this period, for a potential
total aggregate amount of up to $6.5
billion.
The Secretaries and the Director
believe that, although capital markets
have improved, lenders may continue to
have difficulty in obtaining funding to
make loan commitments for the
upcoming academic year, or to make
subsequent disbursements on loans,
without a commitment from the
Department to purchase those loans. To
address this need, the Secretaries and
the Director have concluded that the
Purchase Program and the Participation
Program should be replicated for the
2009–2010 academic year. The
Secretaries and the Director further
conclude that the Department should
enter into forward purchase
commitments with one or more
conforming ABCP Conduits that can
purchase FFELP loans, and thereby
provide additional liquidity to support
new lending. An entity that wishes to
establish an ABCP Conduit must submit
such offers to the Department at https://
www.federalstudentaid.ed.gov/ffelp.
Terms and Conditions
Pursuant to section 459A of the HEA,
the Secretaries and Director establish
the terms and conditions that will
govern these additional purchase
programs. The terms and conditions
governing the replication of the Loan
Purchase Program for academic year
2009–2010 (‘‘2009–2010 Loan Purchase
Commitment Program Terms and
Conditions’’) are attached as Appendix
A to this notice; those governing the
replication of the Participation Program
for academic year 2009–2010 (‘‘2009–
2010 Loan Participation Program Terms
and Conditions’’) are attached as
Appendix B to this notice, and those
governing the ABCP Conduit Program
are attached as Appendix C to this
notice.
The 2009–2010 Purchase Program and
2009–2010 Participation Program will
operate for the 2009–2010 academic
year in substantially the same way as
the Purchase Program and Participation
Program did for the 2008–2009
academic year.
Under the ABCP Conduit Program,
the Department will enter into forward
PO 00000
Frm 00012
Fmt 4703
Sfmt 4703
2519
purchase commitments to purchase
FFELP loans (subsidized Stafford loans,
unsubsidized Stafford loans, and PLUS
loans) on which the lender made the
first disbursement on or after October 1,
2003, but no later than June 30, 2009,
fully disbursed no later than September
30, 2009, and conveyed to the Conduit
no later than June 30, 2010. The
Department will not agree to purchase
FFELP Consolidation loans under this
program.
In order to participate in the ABCP
Conduit Program, a sponsoring entity
must enter into a ‘‘Put Agreement’’ with
the Department consistent with the
terms and conditions stated in
Appendix C. The Put Agreement will
establish the nature of the relationship
between the Department and the
Conduit and Conduit Manager. The
Department will agree to purchase loans
from the Conduit upon demand as
needed to support the issuance of
commercial paper by the Conduit. The
Conduit is expected to exercise the Put
only after the Conduit has attempted to
obtain funds to meet maturing
commercial paper from other resources,
including other financial institutions,
and has either been unable to do so, or,
if it has obtained such funding, is
unable to issue new commercial paper
sufficient to obtain funds to repay those
borrowings.
As explained in detail in Appendix C,
the Department will agree to purchase
loans at either 97 percent or 100 percent
of the total of the outstanding principal
balance plus accrued but unpaid
interest as of the purchase date,
depending on the characteristics of the
loan. The Conduit may purchase loans
as defined in the Put Agreement and the
attached terms and conditions for the
ABCP Conduit Program in Appendix C.
Loans purchased by the Conduit must
have been selected from the seller’s
portfolio in a manner that assures the
sale to the Conduit of loans is fairly
representative of the seller’s total
portfolio of conduit eligible loans. In
addition, a lender that sells the Conduit
a loan owed by a particular borrower
must also sell the Conduit all other
eligible loans it holds for that particular
borrower.
Under the 2009–2010 Purchase
Program and 2009–2010 Participation
Program, the Department will purchase
loans or participation interests in loans
that have ‘‘eligible borrower benefits,’’
which are borrower benefits previously
deemed acceptable in the 2008–2009
programs (upfront fee reductions
already consummated or interest
reductions not exceeding .25 percent
conditioned on borrower use of an
automatic loan payment process).
E:\FR\FM\15JAN1.SGM
15JAN1
2520
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
jlentini on PROD1PC65 with NOTICES
However, under the ABCP Conduit
Program, the Department will agree to
purchase loans with a broader range of
borrower benefits, as summarized in the
terms and conditions for the ABCP
Conduit Program in Appendix C to this
notice. In addition, a list of those
specific borrower benefits will be posted
to the Department’s Web site at https://
www.federalstudentaid.ed.gov/ffelp.
While loans that have a direct
payment to a borrower as a borrower
benefit—rather than an interest or
principal reduction—are eligible for
inclusion in the Conduit, the
Department will require the holder of
the loan to make the payment to the
borrower prior to sale to the
Department, regardless of whether the
borrower actually earned the benefit.
The Department will also require the
seller of the loan to establish a reserve
for this purpose.
Outline of Methodology and Factors in
Determining Prices for All Programs
In accordance with Public Law No.
110–227, Public Law 110–315, and
Public Law 110–350, the goal in
structuring the 2009–2010 Purchase
Program, the 2009–2010 Participation
Program, and the ABCP Conduit
Program is to maximize student loan
availability while ensuring loan
purchases result in no net cost to the
Federal Government. The Secretaries
and Director described the basis for
determining the cost neutrality for the
Purchase Program and Participation
Program in the Federal Register notice
published on July 1, 2008 (73 FR
37422). While this notice provides
updated cost estimates, the
methodology remains essentially the
same for the 2009–2010 Purchase
Program, the 2009–2010 Participation
Program, and the ABCP Conduit
Program based on analysis of the
Department of Education. This section
of the notice responds in particular to
the statutory requirement for an outline
of the methodology and factors
considered in evaluating the price at
which loans may be purchased, and
describes how the use of such
methodology and consideration of such
factors will ensure no net cost to the
Federal Government results from the
loan purchases for the 2009–2010
Purchase Program, the 2009–2010
Participation Program, and the ABCP
Conduit Program.
Price: To determine the price at which
FFELP loans would be purchased from
the Conduit, the Secretary of Education
considered several factors. These factors
included the price that would ensure
this program resulted in no net cost to
the Federal Government; the increased
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
liquidity that the rate would offer
distressed lenders; borrower benefits;
and other factors. Based on this
analysis, the Secretary of Education
determined that 100 percent of
outstanding principal and accrued
interest was the appropriate price for
those loans first disbursed on or after
May 1, 2008, with no borrower benefits
or only ‘‘eligible borrower benefits,’’ and
not more than 255 days delinquent at
the time of purchase, and 97 percent of
principal and interest for any other
loans. For the 2009–2010 Purchase
Program and the 2009–2010
Participation Program, the Secretary of
Education determined that the prices
used for the 2008–2009 Programs
remained the appropriate prices for
2009–2010. The Department will pay a
purchase price for a loan for 2009–2010
of 100 percent of outstanding principal
and interest plus one percent fee
previously paid on the loan and $75.00.
To purchase a participation interest in
2009–2010 loan, the Department will
pay 100 percent of the amount of the
outstanding principal (including any
capitalized interest) of the loan at the
time of purchase of the interest.
Analysis of Cost Neutrality
The cost-neutrality analysis
conducted solely by the Department of
Education used, in part, credit subsidy
cost estimation procedures established
under the Federal Credit Reform Act of
1990 (Pub. L. No. 101–508) and OMB
Circular A–11. These procedures entail
performing various analyses to project
cash flows to and from the Government,
excluding administrative costs. For
changes to outstanding FFELP
guaranteed loans, the analysis reflects
the modification cost, or the difference
between the estimate of the net present
value of the remaining cash flows
underlying the most recent President’s
Budget for such loan guarantees, and the
estimate of the net present value of
these cash flows after the purchase
program, reflecting only the effects of
the modification. For new loans, cash
flows are discounted to the point of
disbursement, using the Credit Subsidy
Calculator 2 (‘‘OMB calculator’’),
developed by the Office of Management
and Budget to estimate credit subsidy
costs for all Federal credit programs, as
the discounting tool. Costs for new
loans can be expressed as subsidy rates
that reflect the Federal costs associated
with a loan; these costs are expressed as
a percentage of the credit extended by
the loan. For example, a subsidy rate of
10.0 percent indicates a Federal cost of
$10 on a $100 loan.
The metric to determine cost
neutrality was that costs under the new
PO 00000
Frm 00013
Fmt 4703
Sfmt 4703
programs should not exceed costs
expected under the FFELP in the
absence of these programs. All cost
estimates were based on economic and
technical assumptions developed for the
FY 2009 President’s Budget for the
FFELP, updated to reflect the impact of
statutory or administrative actions that
have occurred since the budget was
published in February 2008.
Student loan cost estimates were
developed to assess the Federal cost
incurred for loans financed for each
loan type. The analysis also considered
risk factors particular to the 2009–2010
Purchase Program, the 2009–2010
Participation Program and the ABCP
Conduit Program, such as the likelihood
that lenders would sell only their least
profitable loans.
This discussion outlines the
Department’s analysis of the 2009–2010
Purchase Program, the 2009–2010
Participation Program, and the ABCP
Conduit Program with respect to the
following critical aspects affecting the
Federal cost:
• Administrative costs
• Borrower behavior
• Lender behavior
• Risk factors
Administrative Costs. Federal
administrative costs are normally not
included in subsidy cost calculations.
To capture the full cost of the 2009–
2010 Purchase Program, the 2009–2010
Participation Program, and the ABCP
Conduit Program, however, section
459A of the HEA requires that the
determination of cost neutrality reflect
total costs, including Federal
administrative costs subject to annual
appropriation, and these costs were
included in this analysis.
Administrative cash flows primarily
involve servicing costs associated with
loans purchased by the Department.
These costs can extend for up to 40
years, as servicing must continue until
the last loan is paid in full. Under the
base scenario for the 2009–2010
Participation and Purchase Programs,
servicing costs would be $557 million
on a present value basis. Servicing costs
associated loans put to the Department
from an ABCP Conduit, weighted across
the three loan volume scenarios
discussed below under ‘‘Lender
Behavior,’’ would be $35 million on a
net present value basis. The
Department’s estimates were developed
using the price structure of the
Department’s servicing contract for put
loans, with adjustments for start-up
costs, inflation, and other costs.
Borrower Behavior. Since the base
FFELP serves as the foundation of the
2009–2010 Purchase Program, the 2009–
2010 Participation Program, and the
E:\FR\FM\15JAN1.SGM
15JAN1
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
ABCP Conduit Program, and the
characteristics of the base program are
unchanged, there is no reason to believe
that the 2009–2010 Purchase Program,
the 2009–2010 Participation Program, or
the ABCP Conduit Program will affect
borrower behavior. Thus, this cost
analysis uses borrower behavior
assumptions used to prepare the FY
2009 President’s Budget to gauge the
effect on program costs of borrowerbased activities such as loan repayment,
use of statutory benefits such as
deferments and loan discharges, and
default rates and timing. These
assumptions are based on a wide range
of data sources, including the National
Student Loan Data System, the
Department’s operational and financial
systems, and a group of surveys
conducted by the National Center for
Education Statistics such as the 2004
National Postsecondary Student Aid
Survey, the 1994 National Education
Longitudinal Study, and the 1996
Beginning Postsecondary Student
Survey.
Lender Behavior. A key factor in
assessing whether the proposed
programs would operate in a costneutral manner was lender behavior:
specifically for the ABCP Conduit
Program, how many ABCP Conduits
would be created, and for the 2009–
2010 Purchase Program and the 2009–
2010 Participation Program, how many
lenders would participate in the
program, including how many and what
type of loans would they eventually
choose to sell to the Department. The
Department considered alternative
scenarios of lender behavior to
determine whether the 2009–2010
Purchase Program, the 2009–2010
Participation Program, and ABCP
Conduit Program could be considered
cost-neutral under each. Because the
ABCP Conduit Program would allow the
Conduit Manager to sell loans with
contingent borrower benefits—such as
interest rate reductions for a specified
number of on-time payments—all
alternatives include an adjustment to
reflect the impact of these potential
reductions on future loan repayments.
Consistent with stress tests applied by
rating agencies in the private
securitization market, this adjustment
reduces the net cash flow to the
Government by reducing the principal
of sold loans by 0.5 percent a year.
Based on an analysis of lender and
probability data provided by the
Treasury Department and the
Department of Education’s financial
advisors, it was determined the most
likely size of the ABCP Conduit Program
was $25 billion. Within that total, three
scenarios were used to assess the impact
VerDate Nov<24>2008
20:45 Jan 14, 2009
Jkt 217001
of different behavior by participating
lenders. The first assumed the ABCP
Conduit Program would be unsuccessful
and 100 percent of loans would be put
to the Department on October 1, 2009;
the likelihood of this scenario occurring
was 2 percent. Under Scenario 2,
ongoing minor market disruptions were
assumed to result in 20 percent of loans
being put, evenly distributed across the
five-year life of the ABCP Conduit; this
scenario had a likelihood of 10 percent.
The third and most probable scenario,
with an 88 percent likelihood, assumed
that, at the end of the ABCP Conduit,
not-for-profit lenders would put 75
percent of their volume and for-profit
lenders would put 10 percent of their
volume. Scenarios 2 and 3 both also
assume loans would be put upon
becoming more than 210 days
delinquent. Consolidated results were
developed weighted by each scenario’s
relative probability.
Two scenarios were examined for the
2009–2010 Participation Program, one
under which lenders would put 100
percent of loans financed through the
program at the end of 2010 and one
under which lenders would put 50
percent of loans financed through
participations and redeem the other 50
percent. For the latter scenario, the
Department assumed a ‘‘worst case’’ in
which lenders sold their smallest, least
profitable loans. Because long-term loan
servicing costs are generally charged on
an account basis independent of loan
size, small loans tend to be less
profitable than larger loans. Considering
the probability of the various scenarios,
the Department determined that costs
for the 2009–2010 Purchase Program,
the 2009–2010 Participation Program,
and the ABCP Conduit Program were
less expensive to the Government than
baseline subsidy costs for FFELP loans.
(Please see Tables in this notice for a
summary of the analysis.)
Risk Factors. Analyzing whether the
2009–2010 Purchase Program, the 2009–
2010 Participation Program, and the
ABCP Conduit Program would operate
in a cost-neutral manner requires that
projected costs account for the presence
of various risk factors that must be
assumed since these programs will not
operate entirely like the base FFELP, or
without operational risk. As such, the
Secretary of Education’s estimates for
the 2009–2010 Purchase and
Participation Programs included the
same adjustments included for the
original 2008–2009 programs. For the
ABCP Conduit Program, the estimates
include five risk factors: (1) That
improvements in the national economy
will reduce lenders’ incentives to put
loans for the ABCP Conduit; (2) that
PO 00000
Frm 00014
Fmt 4703
Sfmt 4703
2521
some of the loans purchased by the
Department would be those on which
the Department would reject a
reinsurance claim under the FFELP
(‘‘claim rejects’’); (3) that unforeseen
problems undermine the Department’s
ability to effectively oversee and
administer the ABCP Conduit Program
(‘‘operational risk’’); (4) that costs
related to servicing purchased loans do
not fully reflect possible future
requirements (‘‘general administrative
risk’’); and (5) that the composition of
loans ultimately sold to the Department
may result in higher Federal costs than
the composition assumed in this
analysis (‘‘portfolio composition risk’’).
To ensure cost estimates reflect a
conservative assessment of possible
Federal costs, the Secretary of Education
added cost adjustments to incorporate
each risk factor. The adjustments were
based on an assessment of private-sector
behavior and program data as follows:
Economic Factors. While the current
estimates assume a general
improvement in the national economy,
it also assumes that there will be some
periods wherein it will be in lenders’
financial interest to sell loans in the
ABCP Conduit to the Department.
Because there is a chance conditions
will be such that lenders will choose to
fund these loans privately rather than
sell them to the Department, a risk
factor of 50 basis points has been added
to the estimate.
Claim Rejects. This risk factor takes
into account the costs associated with
the purchase of loans that would not
typically qualify for the federal
reinsurance coverage under the FFELP
due to improper origination or
servicing. The 12 basis point increase in
cost is based on a historical rejected
claim rate of 1 percent of volume, and
assumes that these loans would have
lower loss rates than the average
portfolio.
Operational Risk. This factor
addresses risks that might result from
servicing errors, technology failures, or
fraud. The Department has made every
effort to mitigate operational risk.
Nonetheless, this analysis assumes a
very conservative 100 basis point risk
factor to reflect reduction in program
cost to reflect this risk. This is
consistent with the risk factor used for
the original Participation and Purchase
Programs.
General Administrative Risk. The
Department’s analysis of cost neutrality
examined the Department’s current loan
servicing contract and assumptions of
borrower status over the life of the loan
after purchase by the Department. The
Department’s analysis assumed minimal
start-up costs because the ABCP
E:\FR\FM\15JAN1.SGM
15JAN1
2522
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
jlentini on PROD1PC65 with NOTICES
Conduit Program builds on the current
previously established programmatic
infrastructure. In December 2008, the
Department extended its current loan
servicing contract for one year. This
involved the renegotiation of payment
rates for certain activities which may
affect long-term servicing costs for the
loans purchased under the original
Purchase Program, the original
Participation Program, the 2009–2010
Purchase Program, the 2009–2010
Participation Program, and the ABCP
Conduit Program. Given the future
uncertainty surrounding several factors,
including the assumptions outlined in
this notice and the status of loans
ultimately purchased by the
Department, it is possible that
unforeseen additional costs may be
incurred. Accordingly, a General
Administrative Risk Factor of 100 basis
points was added to the analysis.
Portfolio Composition Risk. The cost
to the Government of the ABCP Conduit
Program depends on numerous factors,
including loan size, default/prepayment
risk, borrower benefits, and other
characteristics of the purchased loans.
The cost-neutrality analysis accounts for
some of these factors, as outlined in this
notice, but may not incorporate all of
the dimensions of lender behavior and
the loans ultimately purchased by the
Department. Given this uncertainty,
savings may deviate to some degree
from the Department’s estimate of
savings in the model. To ensure that the
potential risk and the potential costs are
adequately reflected, a Portfolio
Composition Risk Factor of 100 basis
points was added to the analysis.
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
The Department also considered a
high operational risk scenario in which
the cost assessment for operation risk
was raised from 20 basis points to 80
basis points. Even with this increased
assessment, the Department estimates
that the 2009–2010 Purchase Program,
the 2009–2010 Participation Program,
and the ABCP Conduit Program remain
cost-neutral. The Terms and Conditions
for the 2009–2010 Purchase Program,
the 2009–2010 Participation Program,
and the ABCP Conduit Program seek to
reduce the likelihood of lenders
exclusively selling low-balance loans.
Lenders will be required to sell all
eligible loans they hold for a specific
borrower into the ABCP Conduit, and
the Conduit Manager would be required
to select loans for any put to the
Department in a manner that assures
that the loans to be put are
representative of the Conduit portfolio.
These provisions make it less likely that
lenders will choose to sell only poorlyperforming loans to the Department.
Conclusion. After taking into account
alternative market and lender behavior
scenarios, the Administration
determines that the 2009–2010 Purchase
Program, the 2009–2010 Participation
Program, and the ABCP Conduit
Program are in the best interest of the
United States and will result in no net
cost to the Government.
Applicable Program Regulations: 34
CFR part 682.
Electronic Access to This Document
You may view this document, as well
as all other Department of Education
documents published in the Federal
PO 00000
Frm 00015
Fmt 4703
Sfmt 4703
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. You may
also view this document in PDF at the
following site: https://www.ifap.ed.gov.
You may obtain a copy of the Master
Loan Sale Agreement and direction
regarding submission of the Master Loan
Sale Agreement and offers to sell loans
at https://federalstudentaid.ed.gov/ffelp.
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/
index.html.
(Catalog of Federal Domestic Assistance
Number 84.032 Federal Family Education
Loan Program)
Program Authority: 20 U.S.C. 1087i–1.
Dated: January 9, 2009.
Margaret Spellings,
Secretary of Education.
Dated: January 9, 2009.
Henry M. Paulson, Jr.,
Secretary of the Treasury.
Dated: January 9, 2009.
Stephen S. McMillin,
Deputy Director, Office of Management and
Budget.
BILLING CODE 4000–01–P
E:\FR\FM\15JAN1.SGM
15JAN1
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00016
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2523
EN15JA09.001</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00017
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.002</GPH>
jlentini on PROD1PC65 with NOTICES
2524
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00018
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2525
EN15JA09.003</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00019
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.004</GPH>
jlentini on PROD1PC65 with NOTICES
2526
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00020
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2527
EN15JA09.005</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00021
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.006</GPH>
jlentini on PROD1PC65 with NOTICES
2528
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00022
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2529
EN15JA09.007</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00023
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.008</GPH>
jlentini on PROD1PC65 with NOTICES
2530
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00024
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2531
EN15JA09.009</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00025
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.010</GPH>
jlentini on PROD1PC65 with NOTICES
2532
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00026
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2533
EN15JA09.011</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00027
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.012</GPH>
jlentini on PROD1PC65 with NOTICES
2534
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00028
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2535
EN15JA09.013</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00029
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.014</GPH>
jlentini on PROD1PC65 with NOTICES
2536
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00030
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2537
EN15JA09.015</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00031
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.016</GPH>
jlentini on PROD1PC65 with NOTICES
2538
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00032
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2539
EN15JA09.017</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00033
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.018</GPH>
jlentini on PROD1PC65 with NOTICES
2540
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00034
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2541
EN15JA09.019</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00035
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.020</GPH>
jlentini on PROD1PC65 with NOTICES
2542
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00036
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2543
EN15JA09.021</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00037
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.022</GPH>
jlentini on PROD1PC65 with NOTICES
2544
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00038
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2545
EN15JA09.023</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00039
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.024</GPH>
jlentini on PROD1PC65 with NOTICES
2546
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00040
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2547
EN15JA09.025</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00041
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.026</GPH>
jlentini on PROD1PC65 with NOTICES
2548
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00042
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2549
EN15JA09.027</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00043
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.028</GPH>
jlentini on PROD1PC65 with NOTICES
2550
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00044
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2551
EN15JA09.029</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00045
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.030</GPH>
jlentini on PROD1PC65 with NOTICES
2552
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00046
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2553
EN15JA09.031</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00047
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.032</GPH>
jlentini on PROD1PC65 with NOTICES
2554
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00048
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2555
EN15JA09.033</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00049
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.034</GPH>
jlentini on PROD1PC65 with NOTICES
2556
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00050
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2557
EN15JA09.035</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00051
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.036</GPH>
jlentini on PROD1PC65 with NOTICES
2558
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00052
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2559
EN15JA09.037</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00053
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.038</GPH>
jlentini on PROD1PC65 with NOTICES
2560
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00054
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
2561
EN15JA09.039</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
VerDate Nov<24>2008
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00055
Fmt 4703
Sfmt 4725
E:\FR\FM\15JAN1.SGM
15JAN1
EN15JA09.040</GPH>
jlentini on PROD1PC65 with NOTICES
2562
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
PO 00000
Frm 00056
Fmt 4703
Sfmt 4703
E:\FR\FM\15JAN1.SGM
15JAN1
2563
EN15JA09.041</GPH>
jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
2564
Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Notices
[FR Doc. E9–712 Filed 1–14–09; 8:45 am]
BILLING CODE 4000–01–C
DEPARTMENT OF EDUCATION
National Institute on Disability and
Rehabilitation Research—Notice of
Proposed Long-Range Plan for Fiscal
Years 2010–2014
Office of Special Education and
Rehabilitative Services, Department of
Education.
ACTION: Notice of proposed long-range
plan for fiscal years 2010–2014.
jlentini on PROD1PC65 with NOTICES
AGENCY:
SUMMARY: The Assistant Secretary for
Special Education and Rehabilitative
Services proposes the National Institute
on Disability and Rehabilitation
Research’s (NIDRR’s) Long-Range Plan
(Plan) for fiscal years 2010 through
2014. Pursuant to section 202(h)(1) of
the Rehabilitation Act of 1973, as
amended, the Department is required to
develop a plan for NIDRR that outlines
NIDRR’s priorities for rehabilitation
research, demonstration projects,
training, and related activities, and
explains the basis for these priorities.
DATES: We must receive your comments
on or before March 16, 2009.
ADDRESSES: Address all comments about
the proposed Plan to Donna Nangle,
U.S. Department of Education, 400
Maryland Avenue, SW., Room 6029,
Potomac Center Plaza, Washington, DC
20202–2700. If you prefer to send your
comments through the Internet, use the
following address: NIDRRMailbox@ed.gov.
You must include the term ‘‘LongRange Plan’’ in the subject line of your
electronic message.
FOR FURTHER INFORMATION CONTACT:
Donna Nangle. Telephone: (202) 245–
7462 or by e-mail:
donna.nangle@ed.gov.
If you use a telecommunications
device for the deaf (TDD), call the
Federal Relay Service (FRS), toll free, at
1–800–877–8339.
SUPPLEMENTARY INFORMATION:
Invitation to Comment: We invite you
to submit comments regarding the
proposed Plan. To ensure that your
comments have maximum effect in
developing the final Plan, we urge you
to identify clearly the specific area of
the Plan that each comment addresses
and to arrange your comments in the
same order as the proposed Plan.
During and after the comment period,
you may inspect all public comments
about the proposed Plan on our Web
site, at: https://www.ed.gov/about/
offices/list/osers/nidrr/policy.html.
VerDate Nov<24>2008
18:58 Jan 14, 2009
Jkt 217001
Assistance to Individuals With
Disabilities in Reviewing the Record: On
request we will provide an appropriate
accommodation or auxiliary aid to an
individual with a disability who needs
assistance to review the comments or
other documents in the public
rulemaking record for this proposed
Plan. If you want to schedule an
appointment for this type of
accommodation or auxiliary aid, please
contact the person listed under FOR
FURTHER INFORMATION CONTACT.
Background: In developing the
research agenda in the proposed Plan,
NIDRR considered: the legislative
mandate for the Plan; consumer goals
(as documented, for example, in public
input on preparation of this Plan
received via e-mail, the Web, and in a
national teleconference in response to a
notice published in the Federal Register
and an e-mail solicitation inviting
comment on the Plan); and scientific
advances documented through state of
the science conferences and literature.
The purposes of the proposed Plan
are:
(1) To describe the broad general
principles that will guide NIDRR’s
policies and use of resources;
(2) To establish objectives for research
and related activities from which annual
research priorities can be formulated;
and
(3) To describe how NIDRR will
operationalize the Plan, i.e., the process
by which NIDRR establishes annual
priorities.
The authority for the Secretary to
establish the Plan is contained in
section 202(h) of the Rehabilitation Act
of 1973, as amended (29 U.S.C. 762(h)).
The proposed Plan is published as an
attachment to this notice.
Accessible Format: Individuals with
disabilities can obtain this document in
an accessible format (e.g., braille, large
print, audiotape, or computer diskette)
on request to the contact person listed
under FOR FURTHER INFORMATION
CONTACT.
Electronic Access to This Document:
You can view this document, as well as
all other documents of this Department
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
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
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/
index.html.
Dated: January 9, 2009.
Tracy R. Justesen,
Assistant Secretary for Special Education and
Rehabilitative Services.
National Institute on Disability and
Rehabilitation Research: Long-Range
Plan (Plan) for Fiscal Years (FYs) 2010–
2014
I. Introduction
NIDRR’s mission is to support
research and related activities to
generate new knowledge and promote
its effective use in order to improve the
lives of individuals with disabilities and
their opportunities for full participation
in society. The Plan presents goals,
objectives, and strategies for NIDRR
research investments for FYs 2010
through 2014 that are aligned with this
mission and that may be implemented
through funding priorities.
Statutory Mandate
NIDRR was established by the 1978
amendments to the Rehabilitation Act of
1973, as amended (Act). As specified in
section 200 of the Act (29 U.S.C. 760),
NIDRR’s role is to: (a) Support research,
demonstration projects, training, and
related activities to maximize the full
inclusion and integration into society,
employment, independent living, family
support, and economic and social selfsufficiency of individuals with
disabilities of all ages; (b) provide for a
comprehensive and coordinated
approach to the support and conduct of
research, demonstration projects,
training, and related activities; (c)
promote the transfer of rehabilitation
technology; (d) ensure the widespread
distribution of practical scientific and
technological information; and (e)
increase opportunities for researchers
who are members of minority groups
and researchers who are individuals
with disabilities.
NIDRR implements its statutory
mandate by supporting research and
development projects to generate new
knowledge and products, along with
supporting knowledge translation and
capacity building activities. Research
and development are supported through
a variety of program mechanisms
described later in this document.
Knowledge translation is a process of
ensuring that new knowledge and
products gained through research and
development will ultimately be used to
improve the lives of individuals with
disabilities and further their
E:\FR\FM\15JAN1.SGM
15JAN1
]]>Agencies
[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Notices]
[Pages 2518-2564]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-712]
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
DEPARTMENT OF THE TREASURY
OFFICE OF MANAGEMENT AND BUDGET
Federal Family Education Loan Program (FFELP)
AGENCY: Department of Education, Department of the Treasury, Office of
Management and Budget.
ACTION: Notice of terms and conditions of additional purchase of loans
under the Ensuring Continued Access to Student Loans Act of 2008.
-----------------------------------------------------------------------
SUMMARY: Under the authority of section 459A of the Higher Education
Act of 1965, as amended (``HEA''), as enacted by the Ensuring Continued
Access to Student Loans Act of 2008 (Pub. L. 110-227) and amended by
Public Law 110-315 and Public Law 110-350, the Department of Education
(``Department'') may purchase, or enter into forward commitments to
purchase, Federal Family Education Loan Program (``FFELP'') loans made
under sections 428 (subsidized Stafford loans), 428B (PLUS loans), or
428H (unsubsidized Stafford loans) of the HEA, on such terms as the
Secretary of Education (``Secretary''), the Secretary of the Treasury,
and the Director of the Office of Management and Budget (collectively,
``Secretaries and Director'') jointly determine are ``in the best
interest of the United States'' and ``shall not result in any net cost
to the Federal Government (including the cost of servicing the loans
purchased).''
This notice establishes the terms and conditions that will govern
certain loan purchases made under section 459A of the HEA, as extended
by Public Law 110-350, including (a) purchases from an asset-backed
commercial paper vehicle referred to as an ``ABCP Conduit'' or
``Conduit'' (``ABCP Conduit Program'') and (b) replication for the
2009-2010 academic year of the Loan Participation Purchase Program
(``2009-2010 Participation Program'') and Loan Purchase Commitment
Program (``2009-2010 Purchase Program'') (collectively, ``Programs'').
This notice also outlines the Department's methodology and factors
that have been considered in evaluating the price at which the
Department will purchase these additional FFELP loans; and describes
how the use of those factors and methodology will ensure that the
additional loan purchases do not result in any net cost to the Federal
Government. The Secretaries and Director concur in the publication of
this notice and have jointly determined that, based on the Department's
analysis, the purchase of additional loans as described in this notice
is in the best interest of the United States and shall not result in
any net cost to the Federal Government (including the cost of servicing
the loans purchased).
DATES: Effective Date: The terms and conditions governing the purchase
of loans under the 2009-2010 Participation Program and Purchase
Program, and the ABCP Conduit Program are effective January 16, 2009.
FOR FURTHER INFORMATION CONTACT: U.S. Department of Education, Office
of Federal Student Aid, Union Center Plaza, 830 First Street, NE., room
111G3, Washington, DC 20202. Telephone: (202) 377-4401 or by e-mail:
ffel.agreementprocess@ed.gov.
[[Page 2519]]
If you use a telecommunications device for the deaf (TDD), call the
Federal Relay Service (FRS), toll free, at 1-800-877-8339. Individuals
with disabilities can obtain this document in an accessible format
(e.g. , braille, large print, audiotape, or computer diskette) on
request to the office listed under FOR FURTHER INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION:
Introduction
The Department's purchase of FFELP loans is intended primarily to
ensure that students and parents continue to have access to FFELP loans
for the remainder of the 2008-2009 academic year and for the 2009-2010
academic year.
The Department of Education first exercised its authority under
section 459A of the HEA in July 2008, when the Secretaries and Director
established the Participation Program and Purchase Program for eligible
loans made for academic year 2008-2009.\1\
---------------------------------------------------------------------------
\1\ The Secretaries and Director announced the terms and
conditions governing the Participation Program and the Purchase
Program for academic year 2008-2009 in a notice published in the
Federal Register on July 1, 2008 (73 FR 37422). Minor revisions to
this notice were published in the Federal Register on July 17, 2008
(73 FR 41048).
---------------------------------------------------------------------------
Under the Participation Program, the Department has purchased
participation interests in eligible loans that are held by an eligible
lender acting as a sponsor under a Master Participation Agreement.
Under the Purchase Program, the Department has purchased eligible loans
that are held by eligible lenders. To participate in either the
Participation Program or the Purchase Program, a lender must enter into
an agreement with the Department for that program.
Subsequent to the announcements of the Purchase Program and
Participation Program in July, the Secretary of Education concluded
that additional action was necessary to ensure students and parents
have access to FFELP for the remainder of the 2008-2009 academic year.
Specifically, the Secretaries and Director acknowledged the possibility
that some lenders would not be able to obtain capital to make second
disbursements of 2008-2009 academic year FFELP loans even for the
short-term necessary before lenders can utilize the ABCP Conduit
Program. To provide needed liquidity to support new lending, the
Department, through the Short-term Purchase Program announced in
December 2008, extended the offer to purchase loans to include eligible
loans made for the 2007-2008 academic year. The Department at that time
gave notice that it would purchase such loans beginning on or about
December 1, 2008 and would continue purchasing them through February
28, 2009 or the date on which one or more conforming Asset-Backed
Commercial Paper (ABCP) Conduits for purchasing FFELP loans become
operational, whichever occurs earlier. Through the Short-term Purchase
Program, the Department will expend up to $500 million to purchase
eligible loans each week during this period, for a potential total
aggregate amount of up to $6.5 billion.
The Secretaries and the Director believe that, although capital
markets have improved, lenders may continue to have difficulty in
obtaining funding to make loan commitments for the upcoming academic
year, or to make subsequent disbursements on loans, without a
commitment from the Department to purchase those loans. To address this
need, the Secretaries and the Director have concluded that the Purchase
Program and the Participation Program should be replicated for the
2009-2010 academic year. The Secretaries and the Director further
conclude that the Department should enter into forward purchase
commitments with one or more conforming ABCP Conduits that can purchase
FFELP loans, and thereby provide additional liquidity to support new
lending. An entity that wishes to establish an ABCP Conduit must submit
such offers to the Department at https://www.federalstudentaid.ed.gov/
ffelp.
Terms and Conditions
Pursuant to section 459A of the HEA, the Secretaries and Director
establish the terms and conditions that will govern these additional
purchase programs. The terms and conditions governing the replication
of the Loan Purchase Program for academic year 2009-2010 (``2009-2010
Loan Purchase Commitment Program Terms and Conditions'') are attached
as Appendix A to this notice; those governing the replication of the
Participation Program for academic year 2009-2010 (``2009-2010 Loan
Participation Program Terms and Conditions'') are attached as Appendix
B to this notice, and those governing the ABCP Conduit Program are
attached as Appendix C to this notice.
The 2009-2010 Purchase Program and 2009-2010 Participation Program
will operate for the 2009-2010 academic year in substantially the same
way as the Purchase Program and Participation Program did for the 2008-
2009 academic year.
Under the ABCP Conduit Program, the Department will enter into
forward purchase commitments to purchase FFELP loans (subsidized
Stafford loans, unsubsidized Stafford loans, and PLUS loans) on which
the lender made the first disbursement on or after October 1, 2003, but
no later than June 30, 2009, fully disbursed no later than September
30, 2009, and conveyed to the Conduit no later than June 30, 2010. The
Department will not agree to purchase FFELP Consolidation loans under
this program.
In order to participate in the ABCP Conduit Program, a sponsoring
entity must enter into a ``Put Agreement'' with the Department
consistent with the terms and conditions stated in Appendix C. The Put
Agreement will establish the nature of the relationship between the
Department and the Conduit and Conduit Manager. The Department will
agree to purchase loans from the Conduit upon demand as needed to
support the issuance of commercial paper by the Conduit. The Conduit is
expected to exercise the Put only after the Conduit has attempted to
obtain funds to meet maturing commercial paper from other resources,
including other financial institutions, and has either been unable to
do so, or, if it has obtained such funding, is unable to issue new
commercial paper sufficient to obtain funds to repay those borrowings.
As explained in detail in Appendix C, the Department will agree to
purchase loans at either 97 percent or 100 percent of the total of the
outstanding principal balance plus accrued but unpaid interest as of
the purchase date, depending on the characteristics of the loan. The
Conduit may purchase loans as defined in the Put Agreement and the
attached terms and conditions for the ABCP Conduit Program in Appendix
C. Loans purchased by the Conduit must have been selected from the
seller's portfolio in a manner that assures the sale to the Conduit of
loans is fairly representative of the seller's total portfolio of
conduit eligible loans. In addition, a lender that sells the Conduit a
loan owed by a particular borrower must also sell the Conduit all other
eligible loans it holds for that particular borrower.
Under the 2009-2010 Purchase Program and 2009-2010 Participation
Program, the Department will purchase loans or participation interests
in loans that have ``eligible borrower benefits,'' which are borrower
benefits previously deemed acceptable in the 2008-2009 programs
(upfront fee reductions already consummated or interest reductions not
exceeding .25 percent conditioned on borrower use of an automatic loan
payment process).
[[Page 2520]]
However, under the ABCP Conduit Program, the Department will agree to
purchase loans with a broader range of borrower benefits, as summarized
in the terms and conditions for the ABCP Conduit Program in Appendix C
to this notice. In addition, a list of those specific borrower benefits
will be posted to the Department's Web site at https://
www.federalstudentaid.ed.gov/ffelp.
While loans that have a direct payment to a borrower as a borrower
benefit--rather than an interest or principal reduction--are eligible
for inclusion in the Conduit, the Department will require the holder of
the loan to make the payment to the borrower prior to sale to the
Department, regardless of whether the borrower actually earned the
benefit. The Department will also require the seller of the loan to
establish a reserve for this purpose.
Outline of Methodology and Factors in Determining Prices for All
Programs
In accordance with Public Law No. 110-227, Public Law 110-315, and
Public Law 110-350, the goal in structuring the 2009-2010 Purchase
Program, the 2009-2010 Participation Program, and the ABCP Conduit
Program is to maximize student loan availability while ensuring loan
purchases result in no net cost to the Federal Government. The
Secretaries and Director described the basis for determining the cost
neutrality for the Purchase Program and Participation Program in the
Federal Register notice published on July 1, 2008 (73 FR 37422). While
this notice provides updated cost estimates, the methodology remains
essentially the same for the 2009-2010 Purchase Program, the 2009-2010
Participation Program, and the ABCP Conduit Program based on analysis
of the Department of Education. This section of the notice responds in
particular to the statutory requirement for an outline of the
methodology and factors considered in evaluating the price at which
loans may be purchased, and describes how the use of such methodology
and consideration of such factors will ensure no net cost to the
Federal Government results from the loan purchases for the 2009-2010
Purchase Program, the 2009-2010 Participation Program, and the ABCP
Conduit Program.
Price: To determine the price at which FFELP loans would be
purchased from the Conduit, the Secretary of Education considered
several factors. These factors included the price that would ensure
this program resulted in no net cost to the Federal Government; the
increased liquidity that the rate would offer distressed lenders;
borrower benefits; and other factors. Based on this analysis, the
Secretary of Education determined that 100 percent of outstanding
principal and accrued interest was the appropriate price for those
loans first disbursed on or after May 1, 2008, with no borrower
benefits or only ``eligible borrower benefits,'' and not more than 255
days delinquent at the time of purchase, and 97 percent of principal
and interest for any other loans. For the 2009-2010 Purchase Program
and the 2009-2010 Participation Program, the Secretary of Education
determined that the prices used for the 2008-2009 Programs remained the
appropriate prices for 2009-2010. The Department will pay a purchase
price for a loan for 2009-2010 of 100 percent of outstanding principal
and interest plus one percent fee previously paid on the loan and
$75.00. To purchase a participation interest in 2009-2010 loan, the
Department will pay 100 percent of the amount of the outstanding
principal (including any capitalized interest) of the loan at the time
of purchase of the interest.
Analysis of Cost Neutrality
The cost-neutrality analysis conducted solely by the Department of
Education used, in part, credit subsidy cost estimation procedures
established under the Federal Credit Reform Act of 1990 (Pub. L. No.
101-508) and OMB Circular A-11. These procedures entail performing
various analyses to project cash flows to and from the Government,
excluding administrative costs. For changes to outstanding FFELP
guaranteed loans, the analysis reflects the modification cost, or the
difference between the estimate of the net present value of the
remaining cash flows underlying the most recent President's Budget for
such loan guarantees, and the estimate of the net present value of
these cash flows after the purchase program, reflecting only the
effects of the modification. For new loans, cash flows are discounted
to the point of disbursement, using the Credit Subsidy Calculator 2
(``OMB calculator''), developed by the Office of Management and Budget
to estimate credit subsidy costs for all Federal credit programs, as
the discounting tool. Costs for new loans can be expressed as subsidy
rates that reflect the Federal costs associated with a loan; these
costs are expressed as a percentage of the credit extended by the loan.
For example, a subsidy rate of 10.0 percent indicates a Federal cost of
$10 on a $100 loan.
The metric to determine cost neutrality was that costs under the
new programs should not exceed costs expected under the FFELP in the
absence of these programs. All cost estimates were based on economic
and technical assumptions developed for the FY 2009 President's Budget
for the FFELP, updated to reflect the impact of statutory or
administrative actions that have occurred since the budget was
published in February 2008.
Student loan cost estimates were developed to assess the Federal
cost incurred for loans financed for each loan type. The analysis also
considered risk factors particular to the 2009-2010 Purchase Program,
the 2009-2010 Participation Program and the ABCP Conduit Program, such
as the likelihood that lenders would sell only their least profitable
loans.
This discussion outlines the Department's analysis of the 2009-2010
Purchase Program, the 2009-2010 Participation Program, and the ABCP
Conduit Program with respect to the following critical aspects
affecting the Federal cost:
Administrative costs
Borrower behavior
Lender behavior
Risk factors
Administrative Costs. Federal administrative costs are normally not
included in subsidy cost calculations. To capture the full cost of the
2009-2010 Purchase Program, the 2009-2010 Participation Program, and
the ABCP Conduit Program, however, section 459A of the HEA requires
that the determination of cost neutrality reflect total costs,
including Federal administrative costs subject to annual appropriation,
and these costs were included in this analysis. Administrative cash
flows primarily involve servicing costs associated with loans purchased
by the Department. These costs can extend for up to 40 years, as
servicing must continue until the last loan is paid in full. Under the
base scenario for the 2009-2010 Participation and Purchase Programs,
servicing costs would be $557 million on a present value basis.
Servicing costs associated loans put to the Department from an ABCP
Conduit, weighted across the three loan volume scenarios discussed
below under ``Lender Behavior,'' would be $35 million on a net present
value basis. The Department's estimates were developed using the price
structure of the Department's servicing contract for put loans, with
adjustments for start-up costs, inflation, and other costs.
Borrower Behavior. Since the base FFELP serves as the foundation of
the 2009-2010 Purchase Program, the 2009-2010 Participation Program,
and the
[[Page 2521]]
ABCP Conduit Program, and the characteristics of the base program are
unchanged, there is no reason to believe that the 2009-2010 Purchase
Program, the 2009-2010 Participation Program, or the ABCP Conduit
Program will affect borrower behavior. Thus, this cost analysis uses
borrower behavior assumptions used to prepare the FY 2009 President's
Budget to gauge the effect on program costs of borrower-based
activities such as loan repayment, use of statutory benefits such as
deferments and loan discharges, and default rates and timing. These
assumptions are based on a wide range of data sources, including the
National Student Loan Data System, the Department's operational and
financial systems, and a group of surveys conducted by the National
Center for Education Statistics such as the 2004 National Postsecondary
Student Aid Survey, the 1994 National Education Longitudinal Study, and
the 1996 Beginning Postsecondary Student Survey.
Lender Behavior. A key factor in assessing whether the proposed
programs would operate in a cost-neutral manner was lender behavior:
specifically for the ABCP Conduit Program, how many ABCP Conduits would
be created, and for the 2009-2010 Purchase Program and the 2009-2010
Participation Program, how many lenders would participate in the
program, including how many and what type of loans would they
eventually choose to sell to the Department. The Department considered
alternative scenarios of lender behavior to determine whether the 2009-
2010 Purchase Program, the 2009-2010 Participation Program, and ABCP
Conduit Program could be considered cost-neutral under each. Because
the ABCP Conduit Program would allow the Conduit Manager to sell loans
with contingent borrower benefits--such as interest rate reductions for
a specified number of on-time payments--all alternatives include an
adjustment to reflect the impact of these potential reductions on
future loan repayments. Consistent with stress tests applied by rating
agencies in the private securitization market, this adjustment reduces
the net cash flow to the Government by reducing the principal of sold
loans by 0.5 percent a year.
Based on an analysis of lender and probability data provided by the
Treasury Department and the Department of Education's financial
advisors, it was determined the most likely size of the ABCP Conduit
Program was $25 billion. Within that total, three scenarios were used
to assess the impact of different behavior by participating lenders.
The first assumed the ABCP Conduit Program would be unsuccessful and
100 percent of loans would be put to the Department on October 1, 2009;
the likelihood of this scenario occurring was 2 percent. Under Scenario
2, ongoing minor market disruptions were assumed to result in 20
percent of loans being put, evenly distributed across the five-year
life of the ABCP Conduit; this scenario had a likelihood of 10 percent.
The third and most probable scenario, with an 88 percent likelihood,
assumed that, at the end of the ABCP Conduit, not-for-profit lenders
would put 75 percent of their volume and for-profit lenders would put
10 percent of their volume. Scenarios 2 and 3 both also assume loans
would be put upon becoming more than 210 days delinquent. Consolidated
results were developed weighted by each scenario's relative
probability.
Two scenarios were examined for the 2009-2010 Participation
Program, one under which lenders would put 100 percent of loans
financed through the program at the end of 2010 and one under which
lenders would put 50 percent of loans financed through participations
and redeem the other 50 percent. For the latter scenario, the
Department assumed a ``worst case'' in which lenders sold their
smallest, least profitable loans. Because long-term loan servicing
costs are generally charged on an account basis independent of loan
size, small loans tend to be less profitable than larger loans.
Considering the probability of the various scenarios, the Department
determined that costs for the 2009-2010 Purchase Program, the 2009-2010
Participation Program, and the ABCP Conduit Program were less expensive
to the Government than baseline subsidy costs for FFELP loans. (Please
see Tables in this notice for a summary of the analysis.)
Risk Factors. Analyzing whether the 2009-2010 Purchase Program, the
2009-2010 Participation Program, and the ABCP Conduit Program would
operate in a cost-neutral manner requires that projected costs account
for the presence of various risk factors that must be assumed since
these programs will not operate entirely like the base FFELP, or
without operational risk. As such, the Secretary of Education's
estimates for the 2009-2010 Purchase and Participation Programs
included the same adjustments included for the original 2008-2009
programs. For the ABCP Conduit Program, the estimates include five risk
factors: (1) That improvements in the national economy will reduce
lenders' incentives to put loans for the ABCP Conduit; (2) that some of
the loans purchased by the Department would be those on which the
Department would reject a reinsurance claim under the FFELP (``claim
rejects''); (3) that unforeseen problems undermine the Department's
ability to effectively oversee and administer the ABCP Conduit Program
(``operational risk''); (4) that costs related to servicing purchased
loans do not fully reflect possible future requirements (``general
administrative risk''); and (5) that the composition of loans
ultimately sold to the Department may result in higher Federal costs
than the composition assumed in this analysis (``portfolio composition
risk'').
To ensure cost estimates reflect a conservative assessment of
possible Federal costs, the Secretary of Education added cost
adjustments to incorporate each risk factor. The adjustments were based
on an assessment of private-sector behavior and program data as
follows:
Economic Factors. While the current estimates assume a general
improvement in the national economy, it also assumes that there will be
some periods wherein it will be in lenders' financial interest to sell
loans in the ABCP Conduit to the Department. Because there is a chance
conditions will be such that lenders will choose to fund these loans
privately rather than sell them to the Department, a risk factor of 50
basis points has been added to the estimate.
Claim Rejects. This risk factor takes into account the costs
associated with the purchase of loans that would not typically qualify
for the federal reinsurance coverage under the FFELP due to improper
origination or servicing. The 12 basis point increase in cost is based
on a historical rejected claim rate of 1 percent of volume, and assumes
that these loans would have lower loss rates than the average
portfolio.
Operational Risk. This factor addresses risks that might result
from servicing errors, technology failures, or fraud. The Department
has made every effort to mitigate operational risk. Nonetheless, this
analysis assumes a very conservative 100 basis point risk factor to
reflect reduction in program cost to reflect this risk. This is
consistent with the risk factor used for the original Participation and
Purchase Programs.
General Administrative Risk. The Department's analysis of cost
neutrality examined the Department's current loan servicing contract
and assumptions of borrower status over the life of the loan after
purchase by the Department. The Department's analysis assumed minimal
start-up costs because the ABCP
[[Page 2522]]
Conduit Program builds on the current previously established
programmatic infrastructure. In December 2008, the Department extended
its current loan servicing contract for one year. This involved the
renegotiation of payment rates for certain activities which may affect
long-term servicing costs for the loans purchased under the original
Purchase Program, the original Participation Program, the 2009-2010
Purchase Program, the 2009-2010 Participation Program, and the ABCP
Conduit Program. Given the future uncertainty surrounding several
factors, including the assumptions outlined in this notice and the
status of loans ultimately purchased by the Department, it is possible
that unforeseen additional costs may be incurred. Accordingly, a
General Administrative Risk Factor of 100 basis points was added to the
analysis.
Portfolio Composition Risk. The cost to the Government of the ABCP
Conduit Program depends on numerous factors, including loan size,
default/prepayment risk, borrower benefits, and other characteristics
of the purchased loans. The cost-neutrality analysis accounts for some
of these factors, as outlined in this notice, but may not incorporate
all of the dimensions of lender behavior and the loans ultimately
purchased by the Department. Given this uncertainty, savings may
deviate to some degree from the Department's estimate of savings in the
model. To ensure that the potential risk and the potential costs are
adequately reflected, a Portfolio Composition Risk Factor of 100 basis
points was added to the analysis.
The Department also considered a high operational risk scenario in
which the cost assessment for operation risk was raised from 20 basis
points to 80 basis points. Even with this increased assessment, the
Department estimates that the 2009-2010 Purchase Program, the 2009-2010
Participation Program, and the ABCP Conduit Program remain cost-
neutral. The Terms and Conditions for the 2009-2010 Purchase Program,
the 2009-2010 Participation Program, and the ABCP Conduit Program seek
to reduce the likelihood of lenders exclusively selling low-balance
loans. Lenders will be required to sell all eligible loans they hold
for a specific borrower into the ABCP Conduit, and the Conduit Manager
would be required to select loans for any put to the Department in a
manner that assures that the loans to be put are representative of the
Conduit portfolio. These provisions make it less likely that lenders
will choose to sell only poorly-performing loans to the Department.
Conclusion. After taking into account alternative market and lender
behavior scenarios, the Administration determines that the 2009-2010
Purchase Program, the 2009-2010 Participation Program, and the ABCP
Conduit Program are in the best interest of the United States and will
result in no net cost to the Government.
Applicable Program Regulations: 34 CFR part 682.
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. You may also view this
document in PDF at the following site: https://www.ifap.ed.gov.
You may obtain a copy of the Master Loan Sale Agreement and
direction regarding submission of the Master Loan Sale Agreement and
offers to sell loans at https://federalstudentaid.ed.gov/ffelp.
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 Number 84.032 Federal Family
Education Loan Program)
Program Authority: 20 U.S.C. 1087i-1.
Dated: January 9, 2009.
Margaret Spellings,
Secretary of Education.
Dated: January 9, 2009.
Henry M. Paulson, Jr.,
Secretary of the Treasury.
Dated: January 9, 2009.
Stephen S. McMillin,
Deputy Director, Office of Management and Budget.
BILLING CODE 4000-01-P
[[Page 2523]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.001
[[Page 2524]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.002
[[Page 2525]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.003
[[Page 2526]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.004
[[Page 2527]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.005
[[Page 2528]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.006
[[Page 2529]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.007
[[Page 2530]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.008
[[Page 2531]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.009
[[Page 2532]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.010
[[Page 2533]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.011
[[Page 2534]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.012
[[Page 2535]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.013
[[Page 2536]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.014
[[Page 2537]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.015
[[Page 2538]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.016
[[Page 2539]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.017
[[Page 2540]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.018
[[Page 2541]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.019
[[Page 2542]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.020
[[Page 2543]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.021
[[Page 2544]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.022
[[Page 2545]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.023
[[Page 2546]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.024
[[Page 2547]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.025
[[Page 2548]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.026
[[Page 2549]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.027
[[Page 2550]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.028
[[Page 2551]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.029
[[Page 2552]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.030
[[Page 2553]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.031
[[Page 2554]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.032
[[Page 2555]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.033
[[Page 2556]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.034
[[Page 2557]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.035
[[Page 2558]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.036
[[Page 2559]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.037
[[Page 2560]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.038
[[Page 2561]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.039
[[Page 2562]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.040
[[Page 2563]]
[GRAPHIC] [TIFF OMITTED] TN15JA09.041
[[Page 2564]]
[FR Doc. E9-712 Filed 1-14-09; 8:45 am]
BILLING CODE 4000-01-C
