Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and the Federal Direct Loan Program), 59311-59318 [2012-23831]
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations
Administrative Law Judge or the
Commission if it reviews the matter in
the first instance, shall issue a decision
either dismissing the allegations or, if it
is determined that the allegations are
supported by a preponderance of the
evidence, specify an appropriate
sanction. An Administrative Law
Judge’s decision may be appealed to the
Commission by either party within 30
days. If the Administrative Law Judge’s
decision is appealed, the Commission
will thereafter issue a scheduling order
governing the appeal.
(vii) Investigations and administrative
proceedings prior to the hearing on the
order to show cause will be nonpublic
unless otherwise ordered by the
Commission. Any administrative
hearing on the order to show cause, and
any oral argument on appeal, shall be
open to the public unless otherwise
ordered for good cause by the
Commission or the Administrative Law
Judge.
(6) Regardless of any action or
determination the Commission may or
may not make, the Commission may
direct the General Counsel to refer the
allegations of misconduct to the
appropriate state, territory, or District of
Columbia bar or any other appropriate
authority for further action.
(7) Upon receipt of notification from
any authority having power to suspend
or disbar an attorney from the practice
of law within any state, territory, or the
District of Columbia, demonstrating that
an attorney practicing before the
Commission is subject to an order of
final suspension (not merely temporary
suspension pending further action) or
disbarment by such authority, the
Commission may, without resort to any
of the procedures described in this
section, enter an order temporarily
suspending the attorney from practice
before it and directing the attorney to
show cause within 30 days from the
date of said order why the Commission
should not impose further discipline
against the attorney. If no response is
filed, the attorney will be deemed to
have acceded to such further discipline
as the Commission deems appropriate.
If a response is received, the
Commission may take action or initiate
proceedings consistent with paragraph
(e)(5) of this section before making a
determination whether, and to what
extent, to impose further discipline
against the attorney.
(8) The disciplinary process described
in this section is in addition to, and
does not supersede, the authority of the
Commission or an Administrative Law
Judge to discipline attorneys
participating in part 3 proceedings
pursuant to §§ 3.24(b)(2) or 3.42(d).
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§ 4.2
[Amended]
16. In § 4.2, amend paragraphs (d)(2)
and (d)(4), by removing the phrase
‘‘§ 2.7(d), § 2.7(f)’’ and adding in its
place ‘‘§ 2.10(a)’’.
■
§ 4.9
[Amended]
17. Amend § 4.9, by removing the
phrase ‘‘(16 CFR 2.7)’’ from paragraph
(b)(4) heading and the phrase ‘‘, requests
for review by the full Commission of
those rulings, and Commission rulings
on such requests’’ from paragraph
(b)(4)(i).
■
By direction of the Commission,
Commissioner Rosch dissenting.
Donald S. Clark,
Secretary.
The following will not appear in the Code
of Federal Regulations.
Statement of Chairman Jon Leibowitz
Regarding Revisions to the
Commission’s Part 2 Rules and Rule
4.1(e)
September 19, 2012
Today the Commission issued final
changes to Parts 2 and 4 of the agency’s
Rules of Practice. The revised Rules
streamline and update the procedures
for Commission investigations, and
clarify the agency’s procedures for
evaluating allegations of misconduct by
attorneys practicing before the
Commission, making us a more effective
agency.
All of the Commission generally
supports the revisions. A legitimate
question has been raised, however, that
the revisions to the Part 2 Rules should
have gone further. One issue involves
the occasional use of ‘‘access letters,’’
rather than compulsory process, to
conduct Commission competition
investigations. Over the past few years,
the Commission has moved decisively
toward greater use of compulsory
process in these investigations.
Compulsory process results in faster,
more efficient investigations, especially
in anticompetitive conduct matters
where the recipients may not have
strong incentives to cooperate quickly
with Commission staff. Our experience
has shown that, all too often, the
recipients of voluntary access letters
slow walk compliance. Nevertheless,
while most competition investigations
warrant compulsory process, and its use
is strongly encouraged, it makes sense to
provide staff with at least some
flexibility in choosing which method to
deploy in at least some investigations.
Another question that has been raised
is whether the Rules should require staff
to submit regular status reports to all
Commissioners on pending
investigations. Our staff already meets
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regularly with individual
Commissioners and responds to any
inquiries about particular matters.
Moreover, our current practice is for
staff to submit regular status updates to
the Commission at six-month intervals.
This best practice, however, is a matter
of internal management that does not
necessarily need to be enshrined in the
Rules of Practice.
[FR Doc. 2012–23691 Filed 9–26–12; 8:45 am]
BILLING CODE 6750–01–P
DEPARTMENT OF EDUCATION
34 CFR Parts 668, 674, 682, and 685
Federal Student Aid Programs
(Student Assistance General
Provisions, Federal Perkins Loan
Program, Federal Family Education
Loan Program, and the Federal Direct
Loan Program)
Office of Postsecondary
Education, Department of Education.
ACTION: Updated waivers and
modifications of statutory and
regulatory provisions.
AGENCY:
The Secretary is issuing
updated waivers and modifications of
statutory and regulatory provisions
governing the Federal student financial
aid programs under the authority of the
Higher Education Relief Opportunities
for Students Act of 2003 (HEROES Act).
The HEROES Act requires the Secretary
to publish, in a notice in the Federal
Register, the waivers or modifications of
statutory or regulatory provisions
applicable to the student financial
assistance programs under title IV of the
Higher Education Act of 1965, as
amended (HEA), to assist individuals
who are performing qualifying military
service, and individuals who are
affected by a disaster, war or other
military operation or national
emergency, as described in the
SUPPLEMENTARY INFORMATION section of
this notice.
DATES: Effective September 27, 2012.
The waivers and modifications in this
document expire on September 30,
2017.
SUMMARY:
For
provisions related to the title IV loan
programs (Federal Perkins Loan
Program, Federal Family Education
Loan (FFEL) Program, and Federal
Direct Loan (Direct Loan) Program): Gail
McLarnon, U.S. Department of
Education, 1990 K Street NW., Room
8026, Washington, DC 20006–8510.
Telephone: (202) 219–7048 or by email:
Gail.McLarnon@ed.gov. For other
FOR FURTHER INFORMATION CONTACT:
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations
provisions: Wendy Macias, U.S.
Department of Education, 1990 K Street
NW., Room 8017, Washington, DC
20006–8510. Telephone: (202) 502–7526
or by email: Wendy.Macias@ed.gov.
If you use a telecommunications
device for the deaf (TDD) or text
telephone (TTY), 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 compact disc) by
contacting Wendy Macias, U.S.
Department of Education, 1990 K Street
NW., Room 8017, Washington, DC
20006–8510. Telephone: (202) 502–7526
or by email: Wendy.Macias@ed.gov.
SUPPLEMENTARY INFORMATION: In a notice
published in the Federal Register on
December 12, 2003 (68 FR 69312), the
Secretary exercised the authority under
the HEROES Act (Pub. L. 108–76, 20
U.S.C. 1098bb(b)) and announced
waivers and modifications of statutory
and regulatory provisions designed to
assist ‘‘affected individuals.’’ Under 20
U.S.C. 1098ee(2), the term ‘‘affected
individual’’ means an individual who:
• Is serving on active duty during a
war or other military operation or
national emergency;
• Is performing qualifying National
Guard duty during a war or other
military operation or national
emergency;
• Resides or is employed in an area
that is declared a disaster area by any
Federal, State, or local official in
connection with a national emergency;
or
• Suffered direct economic hardship
as a direct result of a war or other
military operation or national
emergency, as determined by the
Secretary.
Under the HEROES Act, the
Secretary’s authority to provide the
waivers and modifications would have
expired on September 30, 2005. On
September 30, 2005, Public Law 109–78
extended the expiration date of the
Secretary’s authority to September 30,
2007. Accordingly, in a notice in the
Federal Register published on October
20, 2005 (70 FR 61037), the Secretary
extended the expiration of the waivers
and modifications published on
December 12, 2003, to September 30,
2007.
On September 30, 2007, the President
signed into law Public Law 110–93,
which eliminated the September 30,
2007, expiration date of the HEROES
Act, thereby making permanent the
Secretary’s authority to issue waivers
and modifications of statutory and
regulatory provisions.
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On December 26, 2007, the Secretary
published a notice in the Federal
Register (72 FR 72947) extending the
waivers and modifications published on
December 12, 2003, to September 30,
2012. In that notice, the Secretary also
indicated an intent to review the
waivers and modifications published on
December 12, 2003, in light of statutory
and regulatory changes and to consider
whether to change some or all of the
published waivers and modifications.
We are now updating the waivers and
modifications to reflect the results of
that review. With limited exceptions,
the waivers and modifications in this
notice reflect the same waivers and
modifications originally published in
the December 12, 2003, Federal Register
notice. However, they have been
updated to reflect statutory and
regulatory changes that have occurred
since the original publication. In
addition, a waiver has been added to
assist affected individuals in regard to
the annual reevaluation requirements
for borrowers who are repaying loans
made under the Federal Family
Education Loan (FFEL) Program or
Federal Direct Loan (Direct Loan)
Program under the Income-Based
Repayment (IBR) or Income-Contingent
Repayment (ICR) plans.
The waiver and modifications related
to military deferments were eliminated
because the time-limited military
service deferment under section
455(f)(4) of the HEA to which they
applied (commonly referred to as the
Armed Forces deferment) has been
replaced by the military service
deferment authorized in sections
428(b)(1)(M)(iii), 455(f)(2)(C), and
464(c)(2)(A)(iii) of the HEA, which is
available to all borrowers, regardless of
when they received their loans, for any
period during which a borrower is
serving on active duty during a war or
other military operation or national
emergency, or is performing qualifying
National Guard duty during a war or
other military operation or national
emergency.
In addition, the Secretary has decided
not to retain the modification to the
amount of unearned funds an institution
must return under the Return of Title IV
Funds requirements in section 484(b)(1)
of the HEA and 34 CFR 668.22(g)
because the Secretary has determined
that it is not in the best interest of
affected individuals. The removal of
institutional charges that the institution
is required to cover, and has covered,
with non-title IV sources of aid
generally results in the institution
returning less unearned title IV, HEA
program funds and the student
returning more, often leaving the
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student with a larger title IV, HEA
program loan debt.
The Secretary is issuing these waivers
and modifications under the authority
of the HEROES Act, 20 U.S.C.
1098bb(a). In accordance with the
HEROES Act, the Secretary is providing
the waivers and modifications of
statutory and regulatory provisions
applicable to the student financial
assistance programs under title IV of the
HEA that the Secretary believes are
appropriate to ensure that:
• Affected individuals who are
recipients of student financial assistance
under title IV are not placed in a worse
position financially in relation to that
financial assistance because they are
affected individuals;
• Affected individuals who are
recipients of student financial assistance
are not unduly subject to administrative
burden or inadvertent, technical
violations or defaults;
• Affected individuals are not
penalized when a determination of need
for student financial assistance is
calculated;
• Affected individuals are not
required to return or repay an
overpayment of grant funds based on
the HEA’s Return of title IV Funds
provision; and
• Entities that participate in the
student financial assistance programs
under title IV of the HEA and that are
located in areas that are declared
disaster areas by any Federal, State, or
local official in connection with a
national emergency, or whose
operations are significantly affected by
such a disaster, receive temporary relief
from administrative requirements.
In 20 U.S.C. 1098bb(b)(1), the
HEROES Act further provides that
section 437 of the General Education
Provisions Act (20 U.S.C. 1232) and
section 553 of the Administrative
Procedure Act (5 U.S.C. 553) do not
apply to the contents of this notice.
In 20 U.S.C. 1098ee, the HEROES Act
defines the following terms used in this
notice:
Active duty has the meaning given
that term in 10 U.S.C. 101(d)(1), but
does not include active duty for training
or attendance at a service school (e.g.,
the U.S. Military Academy or U.S. Naval
Academy).
Military operation means a
contingency operation as that term is
defined in 10 U.S.C. 101(a)(13).
National emergency means a national
emergency declared by the President of
the United States.
Serving on active duty during a war or
other military operation or national
emergency includes service by an
individual who is—
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(A) a Reserve member of an Armed
Force ordered to active duty under 10
U.S.C. 12301(a), 12301(g), 12302, 12304,
or 12306, or any retired member of an
Armed Force ordered to active duty
under 10 U.S.C. 688, for service in
connection with a war or other military
operation or national emergency,
regardless of the location at which that
active duty service is performed; and
(B) any other member of an Armed
Force on active duty in connection with
any war, operation, or emergency or
subsequent actions or conditions who
has been assigned to a duty station at a
location other than the location at
which the member is normally assigned.
Qualifying National Guard duty
during a war or other military operation
or national emergency means service as
a member of the National Guard on fulltime National Guard duty (as defined in
10 U.S.C. 101(d)(5)) under a call to
active service authorized by the
President or the Secretary of Defense for
a period of more than 30 consecutive
days under 32 U.S.C. 502(f), in
connection with a war, another military
operation, or a national emergency
declared by the President and supported
by Federal funds.
The following waivers and
modifications are grouped into four
categories, according to the affected
individuals to whom they apply.
Category 1: The Secretary is waiving
or modifying the following provisions of
title IV of the HEA and the Department’s
regulations for ALL affected individuals
as specified in the SUPPLEMENTARY
INFORMATION section of this notice:
Need Analysis
Section 480 of the HEA provides that,
in the calculation of an applicant’s
expected family contribution (EFC), the
term ‘‘total income,’’ which is used in
the determination of ‘‘annual adjusted
family income’’ and ‘‘available income,’’
is equal to adjusted gross income plus
untaxed income and benefits for the
preceding tax year minus excludable
income. The HEROES Act allows an
institution to substitute adjusted gross
income plus untaxed income and
benefits received in the first calendar
year of the award year for which such
determination is made for any affected
individual, and for his or her spouse
and dependents, if applicable, in order
to reflect more accurately the financial
condition of an affected individual and
his or her family. The Secretary has
determined that an institution has the
option of using the applicant’s original
EFC or the EFC based on the data from
the first calendar year of the award year.
If an institution chooses to use the
alternate EFC, it should use the
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administrative professional judgment
procedures established by the Secretary
as discussed in the following section on
‘‘Professional Judgment.’’
Professional Judgment
Section 479A of the HEA specifically
gives the financial aid administrator
(FAA) the authority to use professional
judgment to make case-by-case
adjustments to the cost of attendance or
to the values of the items used in
calculating the EFC to reflect a student’s
special circumstances. The Secretary is
modifying this provision by removing
the requirement that adjustments be
made case by case for affected
individuals. The use of professional
judgment in Federal need analysis is
discussed in the Federal Student Aid
Handbook available at www.ifap.ed.gov.
The Secretary encourages FAAs to use
professional judgment in order to reflect
more accurately the financial need of
affected individuals. To that end, the
Secretary encourages institutions to
determine an affected individual’s need
using the method listed below that is
the most beneficial to the affected
individual:
• By using the adjusted gross income
(AGI) plus untaxed income and benefits
received in the first calendar year of the
award year;
• By using professional judgment; or
• By making no modifications. (For
example, in some cases, an individual’s
income will increase as a result of
serving on active duty or performing
qualifying National Guard duty.)
The FAA must clearly document the
reasons for any adjustment and the facts
supporting the decision. In almost all
cases, the FAA should have
documentation from a third party with
knowledge of the student’s unusual
circumstances. As usual, any
professional judgment decisions made
by an FAA that affect a student’s
eligibility for a subsidized student
financial assistance program must be
reported to the Central Processing
System.
Return of Title IV Funds—Grant
Overpayments Owed by the Student
Section 484B(b)(2) of the HEA and 34
CFR 668.22(h)(3)(ii) require a student to
return or repay, as appropriate,
unearned grant funds for which the
student is responsible under the Return
of Title IV Funds calculation. For a
student who withdraws from an
institution because of his or her status
as an affected individual, the Secretary
is waiving these statutory and regulatory
requirements so that a student is not
required to return or repay any
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overpayment of grant funds based on
the Return of Title IV Funds provisions.
For these students, the Secretary also
waives 34 CFR 668.22(h)(4), which:
• Requires an institution to notify a
student of a grant overpayment and the
actions the student must take to resolve
the overpayment;
• Denies eligibility to a student who
owes a grant overpayment and does not
take an action to resolve the
overpayment; and
• Requires an institution to refer a
grant overpayment to the Secretary
under certain conditions.
Therefore, an institution is not
required to contact the student, notify
the National Student Loan Data System,
or refer the overpayment to the
Secretary. However, the institution must
document in the student’s file the
amount of any overpayment as part of
the documentation of the application of
this waiver.
The student is not required to return
or repay an overpayment of grant funds
based on the Return of Title IV Funds
provision. Therefore, an institution
must not apply any title IV credit
balance to the grant overpayment prior
to: using a credit balance to pay
authorized charges; paying any amount
of the title IV credit balance to the
student or parent, in the case of a parent
PLUS loan; or using the credit balance
to reduce the student’s title IV loan debt
(with the student’s authorization) as
provided in Dear Colleague Letter GEN–
04–03 (February 2004; revised
November 2004).
Verification of AGI and U.S. Income
Tax Paid
Pursuant to 34 CFR 668.57(a)(3)(ii),
for an individual who is required to file
a U.S. income tax return and has been
granted a filing extension by the Internal
Revenue Service (IRS), an institution
must accept, in lieu of an income tax
return for verification of AGI or income
tax paid:
• A copy of IRS Form 4868,
‘‘Application for Automatic Extension
of Time to File U.S. Individual Income
Tax Return,’’ that the individual filed
with the IRS for the specified year, or a
copy of the IRS’s approval of an
extension beyond the automatic sixmonth extension if the individual
requested an additional extension of the
filing time; and
• A copy of each IRS Form W–2 that
the individual received for the specified
year or, for a self-employed individual,
a statement signed by the individual
certifying the amount of AGI for the
specified year.
The Secretary is modifying this
provision so that the submission of a
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copy of IRS Form 4868 or a copy of the
IRS extension approval is not required
if an affected individual has not filed an
income tax return by the filing deadline.
For these individuals, an institution
must accept, in lieu of an income tax
return for verification of AGI and taxes
paid:
• A signed statement from the
individual certifying that he or she has
not filed an income tax return or a
request for a filing extension because he
or she was called up for active duty or
for qualifying National Guard duty
during a war or other military operation
or national emergency; and
• A copy of each W–2 received for the
specified year or, for a self-employed
individual, a statement signed by the
individual certifying the amount of AGI
for the specified year.
An institution may request that an
individual granted a filing extension
submit tax information using the IRS
Data Retrieval Tool, or by obtaining a
tax return transcript from the IRS that
lists tax account information for the
specified year after the income tax
return is filed. If an institution receives
the tax information, it must verify the
income information of the tax filer(s).
Category 2: The Secretary is waiving
or modifying the following provisions of
title IV of the HEA and the Department’s
regulations for affected individuals who
are serving on active duty, performing
qualifying National Guard duty during a
war or other military operation or
national emergency, or who reside or
are employed in a disaster area as
described in the SUPPLEMENTARY
INFORMATION section of this notice.
Return of Title IV Funds—PostWithdrawal Disbursements of Loan
Funds
Under 34 CFR 668.22(a)(6)(iii)(A)(5)
and (a)(6)(iii)(D), a student (or parent for
a parent PLUS loan) must be provided
a post-withdrawal disbursement of a
title IV loan if the student (or parent)
responds to an institution’s notification
of the post-withdrawal disbursement
within 14 days of the date that the
institution sent the notice, or a later
deadline set by the institution. If a
student or parent submits a late
response, an institution may, but is not
required to, make the post-withdrawal
disbursement.
The Secretary is modifying this
requirement so that, for a student who
withdraws because of his or her status
as an affected individual in this category
and who is eligible for a postwithdrawal disbursement, the 14-day
time period in which the student (or
parent) must normally respond to the
offer of the post-withdrawal
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disbursement is extended to 45 days, or
to a later deadline set by the institution.
If the student or parent submits a
response after the designated period, the
institution may, but is not required to,
make the post-withdrawal
disbursement. As required under the
current regulations, if the student or
parent submits the timely response
instructing the institution to make all or
a portion of the post-withdrawal
disbursement, or the institution chooses
to make a post-withdrawal
disbursement based on receipt of a late
response, the institution must disburse
the funds within 180 days of the date of
the institution’s determination that the
student withdrew.
Leaves of Absence
Under 34 CFR 668.22(d)(3)(iii)(B), a
student is required to provide a written,
signed, and dated request, which
includes the reason for that request, for
an approved leave of absence prior to
the leave of absence. However, if
unforeseen circumstances prevent a
student from providing a prior written
request, the institution may grant the
student’s request for a leave of absence
if the institution documents its decision
and collects the written request at a later
date. It may be appropriate in certain
limited cases for an institution to
provide an approved leave of absence to
a student who must interrupt his or her
enrollment because he or she is an
affected individual in this category.
Therefore, the Secretary is waiving the
requirement that the student provide a
written request for affected individuals
who have difficulty providing a written
request as a result of being an affected
individual in this category. The
institution’s documentation of its
decision to grant the leave of absence
must include, in addition to the reason
for the leave of absence, the reason for
waiving the requirement that the leave
of absence be requested in writing.
Treatment of Title IV Credit Balances
When a Student Withdraws
Under 34 CFR 668.164(e), an
institution must pay any title IV credit
balance to the student, or parent in the
case of a parent PLUS loan, within 14
days after the balance occurred.
However, under 34 CFR 668.165(b)(i), if
a student (or parent) has provided
authorization, an institution may use a
title IV credit balance to reduce the
borrower’s total title IV loan debt, not
just the title IV loan debt for the period
for which the Return of Title IV Funds
calculation is performed.
Therefore, for students who withdraw
because they are affected individuals in
this category, the Secretary is modifying
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34 CFR 668.164(e) to consider that the
institution has met the 14-day
requirement if, within that timeframe,
the institution attempts to contact the
student (or parent) to suggest that the
institution be authorized to return the
credit balance to the loan program(s).
Based upon the instructions of the
student (or parent), the institution must
promptly return the funds to the title IV
loan programs or pay the credit balance
to the student (or parent).
In addition, if an institution chooses
to attempt to contact the student (or
parent) for authorization to apply the
credit balance to reduce the student’s
title IV loan debt, it must allow the
student (or parent) 45 days to respond.
If there is no response within 45 days,
the institution must promptly pay the
credit balance to the student (or parent)
or return the funds to the title IV
programs if the student or parent cannot
be located.
Consistent with the guidance
provided in Dear Colleague Letter GEN–
04–03 (February 2004; revised
November 2004), the institution may
also choose to pay the credit balance to
the student (or parent) without first
requesting permission to apply the
credit balance to reduce the student’s
title IV loan debt.
Cash Management—Borrower Request
for Loan Cancellation
Under 34 CFR 668.165(a)(4)(ii), an
institution must return loan proceeds or
cancel the loan, or both, if the
institution receives a loan cancellation
request from a borrower within 14 days
after the date of the institution’s notice
to the borrower of his or her right to
cancel all or a portion of a loan, or by
the first day of the payment period if the
institution sends the notice more than
14 days before the first day of the
payment period. Under 34 CFR
668.165(a)(4)(iii), if an institution
receives a late loan cancellation request
from a borrower, the institution may,
but is not required to, comply with the
request. For a borrower who is an
affected individual in this category, the
Secretary is modifying this provision to
require an institution to allow at least 60
days, rather than at least 14 days, for the
borrower to request the cancellation of
all or a portion of a loan for which
proceeds have been credited to the
account at the institution. If an
institution receives a loan cancellation
request from a borrower after the 60-day
period, the institution may, but is not
required to, comply with the request.
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Cash Management—Student and Parent
Authorizations
Under 34 CFR 668.164(c)(3)(i), an
institution must obtain affirmative
consent from a student or parent, as
applicable, to disburse title IV funds to
a bank account designated by the
student or parent. In addition, 34 CFR
668.165(b)(1) provides that an
institution must obtain a written
authorization from a student or parent,
as applicable, to:
• Use title IV funds to pay for
educationally related charges incurred
by the student at the institution other
than charges for tuition and fees and, as
applicable, room and board; and
• Hold on behalf of the student or
parent any title IV funds that would
otherwise be paid directly to the student
or parent.
The Secretary is modifying these
provisions to permit an institution to
accept affirmative consent and any
authorization provided by a student (or
parent for a parent PLUS loan) orally,
rather than in writing, if the student or
parent is prevented from providing a
written affirmative consent or
authorization because of his or her
status as an affected individual in this
category. The institution must
document the oral consent or
authorization.
Satisfactory Academic Progress
Institutions may, in cases where a
student failed to meet the institution’s
satisfactory academic progress standards
as a direct result of being an affected
individual in this category, apply the
exception provision of ‘‘other special
circumstances’’ contained in 34 CFR
668.34(a)(9)(ii).
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Borrowers in a Grace Period
Sections 428(b)(7)(D) and 464(c)(7) of
the HEA and 34 CFR 674.31(b)(2)(i)(C),
682.209(a)(5), and 685.207(b)(2)(ii) and
(c)(2)(ii) exclude from a Federal Perkins
Loan, FFEL, or Direct Loan borrower’s
(title IV borrower’s) initial grace period
any period during which a borrower
who is a member of an Armed Forces
reserve component is called or ordered
to active duty for a period of more than
30 days. The statutory and regulatory
provisions further require that any
single excluded period may not exceed
three years and must include the time
necessary for the borrower to resume
enrollment at the next available regular
enrollment period. Lastly, any borrower
who is in a grace period when called or
ordered to active duty is entitled to
another six- or nine-month grace period,
as applicable, upon completion of the
excluded period of service.
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The Secretary is modifying these
statutory and regulatory provisions to
exclude from a title IV borrower’s initial
grace period, any period, not to exceed
three years, during which a borrower is
an affected individual in this category.
Any excluded period must include the
time necessary for an affected
individual in this category to resume
enrollment at the next available
enrollment period.
Borrowers in an ‘‘In-School’’ Period
A title IV borrower is considered to be
in an ‘‘in-school’’ status and is not
required to make payments on a title IV
loan that has not entered repayment as
long as the borrower is enrolled at an
eligible institution on at least a half-time
basis. Under sections 428(b)(7) and
464(c)(1)(A) of the HEA and 34 CFR
674.31(b)(2), 682.209(a), and 685.207(b),
(c), and (e)(2) and (3), when a title IV
borrower ceases to be enrolled at an
eligible institution on at least a half-time
basis, the borrower is obligated to begin
repayment of the loan after a six- or
nine-month grace period, depending on
the title IV loan program and the terms
of the borrower’s promissory note. The
Secretary is modifying the statutory and
regulatory provisions that obligate an
‘‘in-school’’ borrower who has dropped
below half-time status to begin
repayment if the borrower is an affected
individual in this category, by requiring
the holder of the loan to maintain the
loan in an ‘‘in-school’’ status for a
period not to exceed three years,
including the time necessary for the
borrower to resume enrollment in the
next regular enrollment period, if the
borrower is planning to go back to
school. The Secretary will pay interest
that accrues on a subsidized Stafford
Loan as a result of the extension of a
borrower’s in-school status under this
modification.
Borrowers in an In-School or Graduate
Fellowship Deferment
Under sections 427(a)(2)(C)(i),
428(b)(1)(M)(i), 428B(a)(2) and (d)(1),
428C(b)(4)(C), 455(f)(2)(A), and
464(c)(2)(A)(i) of the HEA and 34 CFR
674.34(b)(1), 682.210(b)(1)(i) and (ii),
682.210(s)(2)and(3), and
685.204(b)(1)(i)(A) and (B), a title IV
borrower is eligible for a deferment on
the loan during periods after the
commencement or resumption of the
repayment period on the loan when the
borrower is enrolled and in attendance
as a regular student on at least a halftime basis (or full-time, if required by
the terms of the borrower’s promissory
note) at an eligible institution; enrolled
and in attendance as a regular student
in a course of study that is part of a
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graduate fellowship program; or
engaged in graduate or post-graduate
fellowship-supported study outside the
United States. The borrower’s deferment
period ends when the borrower no
longer meets one of the above
conditions.
The Secretary is waiving the statutory
and regulatory eligibility requirements
for this deferment for title IV borrowers
who were required to interrupt a
graduate fellowship deferment, or who
were in an in-school deferment but who
left school, because of their status as an
affected individual in this category. The
holder of the loan is required to
maintain the loan in the graduate
fellowship deferment or in-school
deferment status for a period not to
exceed three years during which the
borrower is an affected individual in
this category. This period includes the
time necessary for the borrower to
resume his or her graduate fellowship
program or resume enrollment in the
next regular enrollment period if the
borrower returns to school. The
Secretary will pay interest that accrues
on a subsidized Stafford Loan as a result
of extending a borrower’s eligibility for
deferment under this waiver.
Forbearance
Under section 464(e) of the HEA and
34 CFR 674.33(d)(2), there is a threeyear cumulative limit on the length of
forbearances that a Federal Perkins Loan
borrower can receive. To assist Federal
Perkins Loan borrowers who are
affected individuals in this category, the
Secretary is waiving these statutory and
regulatory requirements so that any
forbearance based on a borrower’s status
as an affected individual in this category
is excluded from the three-year
cumulative limit.
Under section 464(e) of the HEA and
34 CFR 674.33(d)(2) and (3), a school
must receive a request and supporting
documentation from a Federal Perkins
Loan borrower before granting the
borrower a forbearance, the terms of
which must be in the form of a written
agreement. The Secretary is waiving
these statutory and regulatory
provisions to require an institution to
grant forbearance based on the
borrower’s status as an affected
individual in this category for a oneyear period, including a three-month
‘‘transition period’’ immediately
following, without supporting
documentation or a written agreement,
based on the written or oral request of
the borrower, a member of the
borrower’s family, or another reliable
source. The purpose of the three-month
transition period is to assist borrowers
so that they will not be required to
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reenter repayment immediately after
they are no longer affected individuals
in this category. In order to grant the
borrower forbearance beyond the initial
twelve- to fifteen-month period,
supporting documentation from the
borrower, a member of the borrower’s
family, or another reliable source is
required.
Under 34 CFR 682.211(i)(1), a FFEL
borrower who requests forbearance
because of a military mobilization must
provide the loan holder with
documentation showing that he or she
is subject to a military mobilization. The
Secretary is waiving this requirement to
allow a borrower who is not otherwise
eligible for the military service
deferment under 34 CFR 682.210(t)(9),
685.204(e)(7), and 674.34(h)(7) to
receive forbearance at the request of the
borrower, a member of the borrower’s
family, or another reliable source for a
one-year period, including a threemonth transition period that
immediately follows immediately
following, without providing the loan
holder with documentation. In order to
grant the borrower forbearance beyond
this period, documentation supporting
the borrower’s military mobilization
must be submitted to the holder of the
loan.
The Secretary will apply the
forbearance waivers and modifications
in this section to loans held by the
Department of Education.
Collection of Defaulted Loans
In accordance with 34 CFR part 674,
subpart C—Due Diligence, and
682.410(b)(6), schools and guaranty
agencies must attempt to recover
amounts owed from defaulted Federal
Perkins and FFEL borrowers,
respectively. The Secretary is waiving
the regulatory provisions that require
schools and guaranty agencies to
attempt collection on defaulted loans for
the time period during which the
borrower is an affected individual in
this category and for a three-month
transition period. The school or
guaranty agency may stop collection
activities upon notification by the
borrower, a member of the borrower’s
family, or another reliable source that
the borrower is an affected individual in
this category. Collection activities must
resume after the borrower has notified
the school or guaranty agency that he or
she is no longer an affected individual
and the three-month transition period
has expired. The loan holder must
document in the loan file why it has
suspended collection activities on the
loan, and the loan holder is not required
to obtain evidence of the borrower’s
status while collection activities have
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been suspended. The Secretary will
apply the waivers described in this
paragraph to loans held by the
Department of Education.
Loan Cancellation
Depending on the loan program,
borrowers may qualify for loan
cancellation if they are employed
fulltime in specified occupations, such
as teaching, as a civil legal assistance
attorney, or in law enforcement,
pursuant to Sections 428J, 428L,
460(b)(1), and 465(a)(2)(A)–(M) and
(a)(3) of the HEA, and 34 CFR 674.53,
674.55, 674.55(b), 674.56, 674.57,
674.58, 674.60, 682.216, and 685.217.
Generally, to qualify for loan
cancellation, borrowers must perform
uninterrupted, otherwise qualifying
service for a specified length of time (for
example, one year) or for consecutive
periods of time, such as five consecutive
years.
For borrowers who are affected
individuals in this category, the
Secretary is waiving the requirements
that apply to the various loan
cancellations that such periods of
service be uninterrupted or consecutive,
if the reason for the interruption is
related to the borrower’s status as an
affected individual in this category.
Therefore, the service period required
for the borrower to receive or retain a
loan cancellation for which he or she is
otherwise eligible will not be
considered interrupted by any period
during which the borrower is an
affected individual in this category,
including the three-month transition
period. The Secretary will apply the
waivers described in this paragraph to
loans held by the Department of
Education.
Rehabilitation of Defaulted Loans
A borrower of a Direct Loan or FFEL
Loan must make nine on-time, monthly
payments over ten consecutive months
to rehabilitate a defaulted loan in
accordance with section 428F(a) of the
HEA and 34 CFR 682.405 and
685.211(f). Federal Perkins Loan
borrowers must make nine consecutive,
on-time monthly payments to
rehabilitate a defaulted Federal Perkins
Loan in accordance with section
464(h)(1)(A) of the HEA. To assist title
IV borrowers who are affected
individuals in this category, the
Secretary is waiving the statutory and
regulatory requirements that payments
made to rehabilitate a loan must be
consecutive or made over no more than
ten consecutive months. Loan holders
should not treat any payment missed
during the time that a borrower is an
affected individual in this category, or
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the three-month transition period, as an
interruption in the number of monthly,
on-time payments required to be made
consecutively, or the number of
consecutive months in which payment
is required to be made, for loan
rehabilitation. If there is an arrangement
or agreement in place between the
borrower and loan holder and the
borrower makes a payment during this
period, the loan holder must treat the
payment as an eligible payment in the
required series of payments. When the
borrower is no longer considered to be
an affected individual in this category,
and the three-month transition period
has expired, the required sequence of
qualifying payments may resume at the
point they were discontinued as a result
of the borrower’s status. The Secretary
will apply the waivers described in this
paragraph to loans held by the
Department of Education.
Reinstatement of Title IV Eligibility
Under sections 428F(b) and 464(h)(2)
of the HEA and under the definition of
‘‘satisfactory repayment arrangement’’
in 34 CFR 668.35(a)(2), 674.2(b),
682.200(b), and 685.102(b), a defaulted
title IV borrower may make six
consecutive, monthly, on-time
payments to reestablish eligibility for
title IV student financial assistance. To
assist title IV borrowers who are affected
individuals in this category, the
Secretary is waiving statutory and
regulatory provisions that require the
borrower to make consecutive payments
in order to reestablish eligibility for title
IV student financial assistance. Loan
holders should not treat any payment
missed during the time that a borrower
is an affected individual in this category
as an interruption in the six
consecutive, monthly, on-time
payments required for reestablishing
title IV eligibility. If there is an
arrangement or agreement in place
between the borrower and loan holder
and the borrower makes a payment
during this period, the loan holder must
treat the payment as an eligible payment
in the required series of payments.
When the borrower is no longer
considered to be an affected individual
or in the three-month transition period
for purposes of this notice, the required
sequence of qualifying payments may
resume at the point they were
discontinued as a result of the
borrower’s status. The Secretary will
apply the waivers described in this
paragraph to loans held by the
Department of Education.
Consolidation of Defaulted Loans
Under the definition of ‘‘satisfactory
repayment arrangement’’ in 34 CFR
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685.102(b), a defaulted FFEL or Direct
Loan borrower may establish eligibility
to consolidate a defaulted loan in the
Direct Consolidation Loan Program by
making three consecutive, monthly, ontime payments on the loan. The
Secretary is waiving the regulatory
requirement that such payments be
consecutive. FFEL loan holders should
not treat any payment missed during the
time that a borrower is an affected
individual in this category as an
interruption in the three consecutive,
monthly, on-time payments required for
establishing eligibility to consolidate a
defaulted loan in the Direct
Consolidation Loan Program. If there is
an arrangement or agreement in place
between the borrower and loan holder
and the borrower makes a payment
during this period, the loan holder must
treat the payment as an eligible payment
in the required series of payments.
When the borrower is no longer
considered to be an affected individual
in this category or in the three-month
transition period, the required sequence
of qualifying payments may resume at
the point they were discontinued as a
result of the borrower’s status as an
affected individual. The Secretary will
apply the waivers described in this
paragraph to Direct and FFEL loans held
by the Department of Education and to
commercially held FFEL loans.
Annual Reevaluation Requirements for
Direct Loan and FFEL Borrowers Under
the Income-Based Repayment (IBR) and
Income-Contingent Repayment (ICR)
Plans
Section 493C(c) of the HEA requires
the Secretary to establish procedures for
annually determining a borrower’s
eligibility for income-based repayment,
including verification of a borrower’s
annual income and the annual amount
due on the total amount of the
borrower’s loans. Section 493C(b)(6) of
the HEA provides that if a borrower no
longer has a partial financial hardship,
the maximum monthly payment amount
the borrower will be required to pay is
an amount that does not exceed the
monthly amount paid under the
standard repayment plan based on a tenyear repayment period. Under 34 CFR
682.215(e), 682.221(e), and 685.209,
borrowers repaying under the IBR or
ICR plan must be evaluated annually to
determine if the borrower continues to
have a partial financial hardship, if
applicable, and whether the borrower’s
monthly payment amount under the IBR
or ICR plan should be recalculated
based on changes in the borrower’s
income or family size. Borrowers are
required to provide information about
their annual income and family size to
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the loan holder each year by the
deadline specified by the holder. A
borrower who fails to provide the
required information would have his or
her monthly payment amount adjusted
to the amount the borrower would pay
under the ten-year standard payment
plan.
The Secretary is waiving these
statutory and regulatory provisions to
require loan holders to maintain an
affected borrower’s payment at the most
recently calculated IBR or ICR monthly
payment amount for up to a three-year
period, including a three-month
transition period immediately
following, if the borrower’s status as an
affected individual in this category has
prevented the borrower from providing
documentation of updated income and
family size by the specified deadline for
the holder’s receipt of that information.
Category 3: The Secretary is waiving
or modifying the following provisions of
title IV of the HEA and the Department’s
regulations for affected individuals who
are serving on active duty or performing
qualifying National Guard duty during a
war or other military operation or
national emergency as described in the
SUPPLEMENTARY INFORMATION section of
this notice.
Institutional Charges and Refunds
The HEROES Act encourages
institutions to provide a full refund of
tuition, fees, and other institutional
charges for the portion of a period of
instruction that a student was unable to
complete, or for which the student did
not receive academic credit, because he
or she was called up for active duty or
for qualifying National Guard duty
during a war or other military operation
or national emergency. Alternatively,
the Secretary encourages institutions to
provide a credit in a comparable amount
against future charges.
The HEROES Act also recommends
that institutions consider providing easy
and flexible reenrollment options to
students who are affected individuals in
this category. At a minimum, an
institution must comply with the
requirements of 34 CFR 668.18, which
addresses the readmission requirements
for service members under certain
conditions.
Of course, an institution may provide
such treatment to affected individuals
other than those who are called up to
active duty or for qualifying National
Guard duty during a war or other
military operation or national
emergency.
Before an institution makes a refund
of institutional charges, it must perform
the required Return of Title IV Funds
calculations based upon the originally
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59317
assessed institutional charges. After
determining the amount that the
institution must return to the title IV
Federal student aid programs, any
reduction of institutional charges may
take into account the funds that the
institution is required to return. In other
words, we do not expect that an
institution would both return funds to
the Federal programs and also provide
a refund of those same funds to the
student.
Category 4: The Secretary is waiving
or modifying the following provisions of
the HEA and the Department’s
regulations for dependents and spouses
of affected individuals who are serving
on active duty or performing qualifying
National Guard duty during a war or
other military operation or national
emergency as described in the
SUPPLEMENTARY INFORMATION section of
this notice.
Verification Signature Requirements
Regulations in 34 CFR 668.57(b) and
(c) require signatures to verify the
number of family members in the
household and the number of family
members enrolled in postsecondary
institutions. The Secretary is waiving
the requirement that a dependent
student submit a statement signed by
one of the applicant’s parents when no
responsible parent can provide the
required signature because of the
parent’s status as an affected individual
in this category.
Required Signatures on the Free
Application for Federal Student Aid
(FAFSA), Student Aid Report (SAR),
and Institutional Student Information
Record (ISIR)
Generally, when a dependent
applicant for title IV aid submits the
FAFSA or submits corrections to a
previously submitted FAFSA, at least
one parental signature is required on the
FAFSA, SAR, or ISIR. The Secretary is
waiving this requirement so that an
applicant need not provide a parent’s
signature when there is no responsible
parent who can provide the required
signature because of the parent’s status
as an affected individual in this
category. In these situations, a student’s
high school counselor or the FAA may
sign on behalf of the parent as long as
the applicant provides adequate
documentation concerning the parent’s
inability to provide a signature due to
the parent’s status as an affected
individual in this category.
Electronic Access to This Document:
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
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations
and the Code of Federal Regulations is
available via the Federal Digital System
at: www.gpo.gov/fdsys. At this site 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). To use PDF you must
have Adobe Acrobat Reader, which is
available free at the site.
You may also access documents of the
Department published in the Federal
Register by using the article search
feature at: www.federalregister.gov.
Specifically, through the advanced
search feature at this site, you can limit
your search to documents published by
the Department.
(Catalog of Federal Domestic Assistance
Numbers: 84.007 Federal Supplemental
Educational Opportunity Grant Program;
84.032 Federal Family Education Loan
Program; 84.032 Federal PLUS Program;
84.033 Federal Work Study Program; 84.038
Federal Perkins Loan Program; 84.063
Federal Pell Grant Program; and 84.268
William D. Ford Federal Direct Loan
Program.)
Program Authority: 20 U.S.C. 1071, 1082,
1087a, 1087aa, Part F–1.
Dated: September 24, 2012.
David A. Bergeron,
Acting Assistant Secretary for Postsecondary
Education.
[FR Doc. 2012–23831 Filed 9–26–12; 8:45 am]
BILLING CODE 4000–01–P
DEPARTMENT OF VETERANS
AFFAIRS
38 CFR Part 51
RIN 2900–AO36
Removal of 30-Day Residency
Requirement for Per Diem Payments
Department of Veterans Affairs.
Direct final rule.
AGENCY:
ACTION:
The Department of Veterans
Affairs (VA) is taking direct final action
to amend its regulations concerning per
diem payments to State homes for the
provision of nursing home care to
veterans. Specifically, this rule removes
the requirement that a veteran must
have resided in a State home for 30
consecutive days before VA will pay per
diem for that veteran when there is no
overnight stay. The intended effect of
this direct final rule is to permit per
diem payments to State homes for
veterans who do not stay overnight,
regardless of how long the veterans have
resided at the State homes, so that the
State homes will hold the veterans’ beds
until the veterans return.
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SUMMARY:
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Effective: This rule is effective on
November 26, 2012, without further
notice, unless VA receives a significant
adverse comment by October 29, 2012.
If significant adverse comment is
received, VA will publish a timely
withdrawal of the rule in the Federal
Register.
ADDRESSES: Written comments may be
submitted through https://
www.regulations.gov; by mail or hand
delivery to the Director, Regulation
Policy and Management (02REG),
Department of Veterans Affairs, 810
Vermont Ave., NW., Room 1068,
Washington, DC 20420; or by fax to
(202) 273–9026. Comments should
indicate that they are submitted in
response to ‘‘RIN 2900–AO36, Removal
of 30-Day Residency Requirement for
Per Diem Payments.’’ Copies of
comments received will be available for
public inspection in the Office of
Regulation Policy and Management,
Room 1063B, between the hours of 8
a.m. and 4:30 p.m., Monday through
Friday (except holidays). Please call
(202) 461–4902 for an appointment.
(This is not a toll-free number.) In
addition, during the comment period,
comments may be viewed online
through the Federal Docket Management
System at https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Harold Bailey, Program Management
Officer (Director of Administration), VA
Health Administration Center,
Purchased Care (10NB3), Veterans
Health Administration, Department of
Veterans Affairs, 810 Vermont Ave.,
NW., Washington, DC 20420, (303) 331–
7551. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: This rule
amends part 51 of title 38, Code of
Federal Regulations, to remove the
requirement that a veteran receiving
nursing home care in a State home must
have resided in the State home for at
least 30 consecutive days before VA will
pay per diem when that veteran does
not stay in the State home overnight. VA
pays per diem to State homes for
veterans who stay elsewhere overnight
to create a ‘‘bed hold,’’ so that the State
home reserves the veteran’s bed until
the veteran returns from a temporary
absence. Typically, these temporary
absences arise from a veteran’s acute
need for a higher level of care, such as
a period of hospitalization. Temporary
absences also arise for reasons other
than hospital care, such as when a
veteran travels to visit family members.
This rule also clarifies in 38 CFR
51.43(c) that VA calculates occupancy
rate ‘‘by dividing the total number of
patients in the nursing home or
domiciliary by the total recognized
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nursing home or domiciliary beds in
that facility.’’ This is consistent with
current practice, and will help ensure
that State homes understand our
methodology.
The 30-day residency requirement for
bed hold per diem payments was
established in 2009 in 38 CFR 51.43(c),
which stated: ‘‘Per diem will be paid
under §§ 51.40 and 51.41 for each day
that the veteran is receiving care and
has an overnight stay. Per diem also will
be paid when there is no overnight stay
if the veteran has resided in the facility
for 30 consecutive days (including
overnight stays) and the facility has an
occupancy rate of 90 percent or greater.
However, these payments will be made
only for the first 10 consecutive days
during which the veteran is admitted as
a patient for any stay in a VA or other
hospital (a hospital stay could occur
more than once in a calendar year) and
only for the first 12 days in a calendar
year during which the veteran is absent
for purposes other than receiving
hospital care.’’ See 74 FR 19433.
In the proposed rule that preceded the
addition of § 51.43, we stated that the
basis for the 30-day residency
requirement was that ‘‘State homes
should receive per diem payments to
hold beds only for permanent residents
and only if the State home would likely
fill the bed without such payments.
Allowing payments for bed holds only
after a veteran has been in a nursing
home for at least 30 consecutive days
(including overnight stays) appears to be
sufficient to establish permanent
residency.’’ 73 FR 72402. In addition,
the 2009 final rule confirmed VA’s
intent to make the 30-day rule a factor
that directly affected eligibility for bed
hold payments, stating: ‘‘We believe that
30 days is a minimal amount of time for
demonstrating that a veteran intends to
be a resident at the State home and that
the veteran was not temporarily placed
in the State home.’’ 74 FR 19429.
VA adopted the 30-day residency
requirement as the measure for
determining whether a veteran would
likely return to a State home after not
having stayed there overnight, and in
turn whether the State home should
receive continued per diem payments in
the veteran’s absence to hold the
veteran’s bed. Through application of
this requirement, however, VA has
come to recognize that duration of
residency in a State home is not an
accurate predictor of whether a veteran
is likely to return to a State home after
a temporary absence. For instance, with
absences resulting from the veteran’s
need for hospital care, the veteran’s
health status while hospitalized is
actually what determines whether and
E:\FR\FM\27SER1.SGM
27SER1
]]>Agencies
[Federal Register Volume 77, Number 188 (Thursday, September 27, 2012)]
[Rules and Regulations]
[Pages 59311-59318]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23831]
=======================================================================
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DEPARTMENT OF EDUCATION
34 CFR Parts 668, 674, 682, and 685
Federal Student Aid Programs (Student Assistance General
Provisions, Federal Perkins Loan Program, Federal Family Education Loan
Program, and the Federal Direct Loan Program)
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Updated waivers and modifications of statutory and regulatory
provisions.
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SUMMARY: The Secretary is issuing updated waivers and modifications of
statutory and regulatory provisions governing the Federal student
financial aid programs under the authority of the Higher Education
Relief Opportunities for Students Act of 2003 (HEROES Act). The HEROES
Act requires the Secretary to publish, in a notice in the Federal
Register, the waivers or modifications of statutory or regulatory
provisions applicable to the student financial assistance programs
under title IV of the Higher Education Act of 1965, as amended (HEA),
to assist individuals who are performing qualifying military service,
and individuals who are affected by a disaster, war or other military
operation or national emergency, as described in the SUPPLEMENTARY
INFORMATION section of this notice.
DATES: Effective September 27, 2012. The waivers and modifications in
this document expire on September 30, 2017.
FOR FURTHER INFORMATION CONTACT: For provisions related to the title IV
loan programs (Federal Perkins Loan Program, Federal Family Education
Loan (FFEL) Program, and Federal Direct Loan (Direct Loan) Program):
Gail McLarnon, U.S. Department of Education, 1990 K Street NW., Room
8026, Washington, DC 20006-8510. Telephone: (202) 219-7048 or by email:
Gail.McLarnon@ed.gov. For other
[[Page 59312]]
provisions: Wendy Macias, U.S. Department of Education, 1990 K Street
NW., Room 8017, Washington, DC 20006-8510. Telephone: (202) 502-7526 or
by email: Wendy.Macias@ed.gov.
If you use a telecommunications device for the deaf (TDD) or text
telephone (TTY), 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 compact
disc) by contacting Wendy Macias, U.S. Department of Education, 1990 K
Street NW., Room 8017, Washington, DC 20006-8510. Telephone: (202) 502-
7526 or by email: Wendy.Macias@ed.gov.
SUPPLEMENTARY INFORMATION: In a notice published in the Federal
Register on December 12, 2003 (68 FR 69312), the Secretary exercised
the authority under the HEROES Act (Pub. L. 108-76, 20 U.S.C.
1098bb(b)) and announced waivers and modifications of statutory and
regulatory provisions designed to assist ``affected individuals.''
Under 20 U.S.C. 1098ee(2), the term ``affected individual'' means an
individual who:
Is serving on active duty during a war or other military
operation or national emergency;
Is performing qualifying National Guard duty during a war
or other military operation or national emergency;
Resides or is employed in an area that is declared a
disaster area by any Federal, State, or local official in connection
with a national emergency; or
Suffered direct economic hardship as a direct result of a
war or other military operation or national emergency, as determined by
the Secretary.
Under the HEROES Act, the Secretary's authority to provide the
waivers and modifications would have expired on September 30, 2005. On
September 30, 2005, Public Law 109-78 extended the expiration date of
the Secretary's authority to September 30, 2007. Accordingly, in a
notice in the Federal Register published on October 20, 2005 (70 FR
61037), the Secretary extended the expiration of the waivers and
modifications published on December 12, 2003, to September 30, 2007.
On September 30, 2007, the President signed into law Public Law
110-93, which eliminated the September 30, 2007, expiration date of the
HEROES Act, thereby making permanent the Secretary's authority to issue
waivers and modifications of statutory and regulatory provisions.
On December 26, 2007, the Secretary published a notice in the
Federal Register (72 FR 72947) extending the waivers and modifications
published on December 12, 2003, to September 30, 2012. In that notice,
the Secretary also indicated an intent to review the waivers and
modifications published on December 12, 2003, in light of statutory and
regulatory changes and to consider whether to change some or all of the
published waivers and modifications.
We are now updating the waivers and modifications to reflect the
results of that review. With limited exceptions, the waivers and
modifications in this notice reflect the same waivers and modifications
originally published in the December 12, 2003, Federal Register notice.
However, they have been updated to reflect statutory and regulatory
changes that have occurred since the original publication. In addition,
a waiver has been added to assist affected individuals in regard to the
annual reevaluation requirements for borrowers who are repaying loans
made under the Federal Family Education Loan (FFEL) Program or Federal
Direct Loan (Direct Loan) Program under the Income-Based Repayment
(IBR) or Income-Contingent Repayment (ICR) plans.
The waiver and modifications related to military deferments were
eliminated because the time-limited military service deferment under
section 455(f)(4) of the HEA to which they applied (commonly referred
to as the Armed Forces deferment) has been replaced by the military
service deferment authorized in sections 428(b)(1)(M)(iii),
455(f)(2)(C), and 464(c)(2)(A)(iii) of the HEA, which is available to
all borrowers, regardless of when they received their loans, for any
period during which a borrower is serving on active duty during a war
or other military operation or national emergency, or is performing
qualifying National Guard duty during a war or other military operation
or national emergency.
In addition, the Secretary has decided not to retain the
modification to the amount of unearned funds an institution must return
under the Return of Title IV Funds requirements in section 484(b)(1) of
the HEA and 34 CFR 668.22(g) because the Secretary has determined that
it is not in the best interest of affected individuals. The removal of
institutional charges that the institution is required to cover, and
has covered, with non-title IV sources of aid generally results in the
institution returning less unearned title IV, HEA program funds and the
student returning more, often leaving the student with a larger title
IV, HEA program loan debt.
The Secretary is issuing these waivers and modifications under the
authority of the HEROES Act, 20 U.S.C. 1098bb(a). In accordance with
the HEROES Act, the Secretary is providing the waivers and
modifications of statutory and regulatory provisions applicable to the
student financial assistance programs under title IV of the HEA that
the Secretary believes are appropriate to ensure that:
Affected individuals who are recipients of student
financial assistance under title IV are not placed in a worse position
financially in relation to that financial assistance because they are
affected individuals;
Affected individuals who are recipients of student
financial assistance are not unduly subject to administrative burden or
inadvertent, technical violations or defaults;
Affected individuals are not penalized when a
determination of need for student financial assistance is calculated;
Affected individuals are not required to return or repay
an overpayment of grant funds based on the HEA's Return of title IV
Funds provision; and
Entities that participate in the student financial
assistance programs under title IV of the HEA and that are located in
areas that are declared disaster areas by any Federal, State, or local
official in connection with a national emergency, or whose operations
are significantly affected by such a disaster, receive temporary relief
from administrative requirements.
In 20 U.S.C. 1098bb(b)(1), the HEROES Act further provides that
section 437 of the General Education Provisions Act (20 U.S.C. 1232)
and section 553 of the Administrative Procedure Act (5 U.S.C. 553) do
not apply to the contents of this notice.
In 20 U.S.C. 1098ee, the HEROES Act defines the following terms
used in this notice:
Active duty has the meaning given that term in 10 U.S.C. 101(d)(1),
but does not include active duty for training or attendance at a
service school (e.g., the U.S. Military Academy or U.S. Naval Academy).
Military operation means a contingency operation as that term is
defined in 10 U.S.C. 101(a)(13).
National emergency means a national emergency declared by the
President of the United States.
Serving on active duty during a war or other military operation or
national emergency includes service by an individual who is--
[[Page 59313]]
(A) a Reserve member of an Armed Force ordered to active duty under
10 U.S.C. 12301(a), 12301(g), 12302, 12304, or 12306, or any retired
member of an Armed Force ordered to active duty under 10 U.S.C. 688,
for service in connection with a war or other military operation or
national emergency, regardless of the location at which that active
duty service is performed; and
(B) any other member of an Armed Force on active duty in connection
with any war, operation, or emergency or subsequent actions or
conditions who has been assigned to a duty station at a location other
than the location at which the member is normally assigned.
Qualifying National Guard duty during a war or other military
operation or national emergency means service as a member of the
National Guard on full-time National Guard duty (as defined in 10
U.S.C. 101(d)(5)) under a call to active service authorized by the
President or the Secretary of Defense for a period of more than 30
consecutive days under 32 U.S.C. 502(f), in connection with a war,
another military operation, or a national emergency declared by the
President and supported by Federal funds.
The following waivers and modifications are grouped into four
categories, according to the affected individuals to whom they apply.
Category 1: The Secretary is waiving or modifying the following
provisions of title IV of the HEA and the Department's regulations for
ALL affected individuals as specified in the SUPPLEMENTARY INFORMATION
section of this notice:
Need Analysis
Section 480 of the HEA provides that, in the calculation of an
applicant's expected family contribution (EFC), the term ``total
income,'' which is used in the determination of ``annual adjusted
family income'' and ``available income,'' is equal to adjusted gross
income plus untaxed income and benefits for the preceding tax year
minus excludable income. The HEROES Act allows an institution to
substitute adjusted gross income plus untaxed income and benefits
received in the first calendar year of the award year for which such
determination is made for any affected individual, and for his or her
spouse and dependents, if applicable, in order to reflect more
accurately the financial condition of an affected individual and his or
her family. The Secretary has determined that an institution has the
option of using the applicant's original EFC or the EFC based on the
data from the first calendar year of the award year.
If an institution chooses to use the alternate EFC, it should use
the administrative professional judgment procedures established by the
Secretary as discussed in the following section on ``Professional
Judgment.''
Professional Judgment
Section 479A of the HEA specifically gives the financial aid
administrator (FAA) the authority to use professional judgment to make
case-by-case adjustments to the cost of attendance or to the values of
the items used in calculating the EFC to reflect a student's special
circumstances. The Secretary is modifying this provision by removing
the requirement that adjustments be made case by case for affected
individuals. The use of professional judgment in Federal need analysis
is discussed in the Federal Student Aid Handbook available at
www.ifap.ed.gov.
The Secretary encourages FAAs to use professional judgment in order
to reflect more accurately the financial need of affected individuals.
To that end, the Secretary encourages institutions to determine an
affected individual's need using the method listed below that is the
most beneficial to the affected individual:
By using the adjusted gross income (AGI) plus untaxed
income and benefits received in the first calendar year of the award
year;
By using professional judgment; or
By making no modifications. (For example, in some cases,
an individual's income will increase as a result of serving on active
duty or performing qualifying National Guard duty.)
The FAA must clearly document the reasons for any adjustment and
the facts supporting the decision. In almost all cases, the FAA should
have documentation from a third party with knowledge of the student's
unusual circumstances. As usual, any professional judgment decisions
made by an FAA that affect a student's eligibility for a subsidized
student financial assistance program must be reported to the Central
Processing System.
Return of Title IV Funds--Grant Overpayments Owed by the Student
Section 484B(b)(2) of the HEA and 34 CFR 668.22(h)(3)(ii) require a
student to return or repay, as appropriate, unearned grant funds for
which the student is responsible under the Return of Title IV Funds
calculation. For a student who withdraws from an institution because of
his or her status as an affected individual, the Secretary is waiving
these statutory and regulatory requirements so that a student is not
required to return or repay any overpayment of grant funds based on the
Return of Title IV Funds provisions.
For these students, the Secretary also waives 34 CFR 668.22(h)(4),
which:
Requires an institution to notify a student of a grant
overpayment and the actions the student must take to resolve the
overpayment;
Denies eligibility to a student who owes a grant
overpayment and does not take an action to resolve the overpayment; and
Requires an institution to refer a grant overpayment to
the Secretary under certain conditions.
Therefore, an institution is not required to contact the student,
notify the National Student Loan Data System, or refer the overpayment
to the Secretary. However, the institution must document in the
student's file the amount of any overpayment as part of the
documentation of the application of this waiver.
The student is not required to return or repay an overpayment of
grant funds based on the Return of Title IV Funds provision. Therefore,
an institution must not apply any title IV credit balance to the grant
overpayment prior to: using a credit balance to pay authorized charges;
paying any amount of the title IV credit balance to the student or
parent, in the case of a parent PLUS loan; or using the credit balance
to reduce the student's title IV loan debt (with the student's
authorization) as provided in Dear Colleague Letter GEN-04-03 (February
2004; revised November 2004).
Verification of AGI and U.S. Income Tax Paid
Pursuant to 34 CFR 668.57(a)(3)(ii), for an individual who is
required to file a U.S. income tax return and has been granted a filing
extension by the Internal Revenue Service (IRS), an institution must
accept, in lieu of an income tax return for verification of AGI or
income tax paid:
A copy of IRS Form 4868, ``Application for Automatic
Extension of Time to File U.S. Individual Income Tax Return,'' that the
individual filed with the IRS for the specified year, or a copy of the
IRS's approval of an extension beyond the automatic six-month extension
if the individual requested an additional extension of the filing time;
and
A copy of each IRS Form W-2 that the individual received
for the specified year or, for a self-employed individual, a statement
signed by the individual certifying the amount of AGI for the specified
year.
The Secretary is modifying this provision so that the submission of
a
[[Page 59314]]
copy of IRS Form 4868 or a copy of the IRS extension approval is not
required if an affected individual has not filed an income tax return
by the filing deadline.
For these individuals, an institution must accept, in lieu of an
income tax return for verification of AGI and taxes paid:
A signed statement from the individual certifying that he
or she has not filed an income tax return or a request for a filing
extension because he or she was called up for active duty or for
qualifying National Guard duty during a war or other military operation
or national emergency; and
A copy of each W-2 received for the specified year or, for
a self-employed individual, a statement signed by the individual
certifying the amount of AGI for the specified year.
An institution may request that an individual granted a filing
extension submit tax information using the IRS Data Retrieval Tool, or
by obtaining a tax return transcript from the IRS that lists tax
account information for the specified year after the income tax return
is filed. If an institution receives the tax information, it must
verify the income information of the tax filer(s).
Category 2: The Secretary is waiving or modifying the following
provisions of title IV of the HEA and the Department's regulations for
affected individuals who are serving on active duty, performing
qualifying National Guard duty during a war or other military operation
or national emergency, or who reside or are employed in a disaster area
as described in the SUPPLEMENTARY INFORMATION section of this notice.
Return of Title IV Funds--Post-Withdrawal Disbursements of Loan Funds
Under 34 CFR 668.22(a)(6)(iii)(A)(5) and (a)(6)(iii)(D), a student
(or parent for a parent PLUS loan) must be provided a post-withdrawal
disbursement of a title IV loan if the student (or parent) responds to
an institution's notification of the post-withdrawal disbursement
within 14 days of the date that the institution sent the notice, or a
later deadline set by the institution. If a student or parent submits a
late response, an institution may, but is not required to, make the
post-withdrawal disbursement.
The Secretary is modifying this requirement so that, for a student
who withdraws because of his or her status as an affected individual in
this category and who is eligible for a post-withdrawal disbursement,
the 14-day time period in which the student (or parent) must normally
respond to the offer of the post-withdrawal disbursement is extended to
45 days, or to a later deadline set by the institution. If the student
or parent submits a response after the designated period, the
institution may, but is not required to, make the post-withdrawal
disbursement. As required under the current regulations, if the student
or parent submits the timely response instructing the institution to
make all or a portion of the post-withdrawal disbursement, or the
institution chooses to make a post-withdrawal disbursement based on
receipt of a late response, the institution must disburse the funds
within 180 days of the date of the institution's determination that the
student withdrew.
Leaves of Absence
Under 34 CFR 668.22(d)(3)(iii)(B), a student is required to provide
a written, signed, and dated request, which includes the reason for
that request, for an approved leave of absence prior to the leave of
absence. However, if unforeseen circumstances prevent a student from
providing a prior written request, the institution may grant the
student's request for a leave of absence if the institution documents
its decision and collects the written request at a later date. It may
be appropriate in certain limited cases for an institution to provide
an approved leave of absence to a student who must interrupt his or her
enrollment because he or she is an affected individual in this
category. Therefore, the Secretary is waiving the requirement that the
student provide a written request for affected individuals who have
difficulty providing a written request as a result of being an affected
individual in this category. The institution's documentation of its
decision to grant the leave of absence must include, in addition to the
reason for the leave of absence, the reason for waiving the requirement
that the leave of absence be requested in writing.
Treatment of Title IV Credit Balances When a Student Withdraws
Under 34 CFR 668.164(e), an institution must pay any title IV
credit balance to the student, or parent in the case of a parent PLUS
loan, within 14 days after the balance occurred. However, under 34 CFR
668.165(b)(i), if a student (or parent) has provided authorization, an
institution may use a title IV credit balance to reduce the borrower's
total title IV loan debt, not just the title IV loan debt for the
period for which the Return of Title IV Funds calculation is performed.
Therefore, for students who withdraw because they are affected
individuals in this category, the Secretary is modifying 34 CFR
668.164(e) to consider that the institution has met the 14-day
requirement if, within that timeframe, the institution attempts to
contact the student (or parent) to suggest that the institution be
authorized to return the credit balance to the loan program(s).
Based upon the instructions of the student (or parent), the
institution must promptly return the funds to the title IV loan
programs or pay the credit balance to the student (or parent).
In addition, if an institution chooses to attempt to contact the
student (or parent) for authorization to apply the credit balance to
reduce the student's title IV loan debt, it must allow the student (or
parent) 45 days to respond. If there is no response within 45 days, the
institution must promptly pay the credit balance to the student (or
parent) or return the funds to the title IV programs if the student or
parent cannot be located.
Consistent with the guidance provided in Dear Colleague Letter GEN-
04-03 (February 2004; revised November 2004), the institution may also
choose to pay the credit balance to the student (or parent) without
first requesting permission to apply the credit balance to reduce the
student's title IV loan debt.
Cash Management--Borrower Request for Loan Cancellation
Under 34 CFR 668.165(a)(4)(ii), an institution must return loan
proceeds or cancel the loan, or both, if the institution receives a
loan cancellation request from a borrower within 14 days after the date
of the institution's notice to the borrower of his or her right to
cancel all or a portion of a loan, or by the first day of the payment
period if the institution sends the notice more than 14 days before the
first day of the payment period. Under 34 CFR 668.165(a)(4)(iii), if an
institution receives a late loan cancellation request from a borrower,
the institution may, but is not required to, comply with the request.
For a borrower who is an affected individual in this category, the
Secretary is modifying this provision to require an institution to
allow at least 60 days, rather than at least 14 days, for the borrower
to request the cancellation of all or a portion of a loan for which
proceeds have been credited to the account at the institution. If an
institution receives a loan cancellation request from a borrower after
the 60-day period, the institution may, but is not required to, comply
with the request.
[[Page 59315]]
Cash Management--Student and Parent Authorizations
Under 34 CFR 668.164(c)(3)(i), an institution must obtain
affirmative consent from a student or parent, as applicable, to
disburse title IV funds to a bank account designated by the student or
parent. In addition, 34 CFR 668.165(b)(1) provides that an institution
must obtain a written authorization from a student or parent, as
applicable, to:
Use title IV funds to pay for educationally related
charges incurred by the student at the institution other than charges
for tuition and fees and, as applicable, room and board; and
Hold on behalf of the student or parent any title IV funds
that would otherwise be paid directly to the student or parent.
The Secretary is modifying these provisions to permit an
institution to accept affirmative consent and any authorization
provided by a student (or parent for a parent PLUS loan) orally, rather
than in writing, if the student or parent is prevented from providing a
written affirmative consent or authorization because of his or her
status as an affected individual in this category. The institution must
document the oral consent or authorization.
Satisfactory Academic Progress
Institutions may, in cases where a student failed to meet the
institution's satisfactory academic progress standards as a direct
result of being an affected individual in this category, apply the
exception provision of ``other special circumstances'' contained in 34
CFR 668.34(a)(9)(ii).
Borrowers in a Grace Period
Sections 428(b)(7)(D) and 464(c)(7) of the HEA and 34 CFR
674.31(b)(2)(i)(C), 682.209(a)(5), and 685.207(b)(2)(ii) and (c)(2)(ii)
exclude from a Federal Perkins Loan, FFEL, or Direct Loan borrower's
(title IV borrower's) initial grace period any period during which a
borrower who is a member of an Armed Forces reserve component is called
or ordered to active duty for a period of more than 30 days. The
statutory and regulatory provisions further require that any single
excluded period may not exceed three years and must include the time
necessary for the borrower to resume enrollment at the next available
regular enrollment period. Lastly, any borrower who is in a grace
period when called or ordered to active duty is entitled to another
six- or nine-month grace period, as applicable, upon completion of the
excluded period of service.
The Secretary is modifying these statutory and regulatory
provisions to exclude from a title IV borrower's initial grace period,
any period, not to exceed three years, during which a borrower is an
affected individual in this category. Any excluded period must include
the time necessary for an affected individual in this category to
resume enrollment at the next available enrollment period.
Borrowers in an ``In-School'' Period
A title IV borrower is considered to be in an ``in-school'' status
and is not required to make payments on a title IV loan that has not
entered repayment as long as the borrower is enrolled at an eligible
institution on at least a half-time basis. Under sections 428(b)(7) and
464(c)(1)(A) of the HEA and 34 CFR 674.31(b)(2), 682.209(a), and
685.207(b), (c), and (e)(2) and (3), when a title IV borrower ceases to
be enrolled at an eligible institution on at least a half-time basis,
the borrower is obligated to begin repayment of the loan after a six-
or nine-month grace period, depending on the title IV loan program and
the terms of the borrower's promissory note. The Secretary is modifying
the statutory and regulatory provisions that obligate an ``in-school''
borrower who has dropped below half-time status to begin repayment if
the borrower is an affected individual in this category, by requiring
the holder of the loan to maintain the loan in an ``in-school'' status
for a period not to exceed three years, including the time necessary
for the borrower to resume enrollment in the next regular enrollment
period, if the borrower is planning to go back to school. The Secretary
will pay interest that accrues on a subsidized Stafford Loan as a
result of the extension of a borrower's in-school status under this
modification.
Borrowers in an In-School or Graduate Fellowship Deferment
Under sections 427(a)(2)(C)(i), 428(b)(1)(M)(i), 428B(a)(2) and
(d)(1), 428C(b)(4)(C), 455(f)(2)(A), and 464(c)(2)(A)(i) of the HEA and
34 CFR 674.34(b)(1), 682.210(b)(1)(i) and (ii), 682.210(s)(2)and(3),
and 685.204(b)(1)(i)(A) and (B), a title IV borrower is eligible for a
deferment on the loan during periods after the commencement or
resumption of the repayment period on the loan when the borrower is
enrolled and in attendance as a regular student on at least a half-time
basis (or full-time, if required by the terms of the borrower's
promissory note) at an eligible institution; enrolled and in attendance
as a regular student in a course of study that is part of a graduate
fellowship program; or engaged in graduate or post-graduate fellowship-
supported study outside the United States. The borrower's deferment
period ends when the borrower no longer meets one of the above
conditions.
The Secretary is waiving the statutory and regulatory eligibility
requirements for this deferment for title IV borrowers who were
required to interrupt a graduate fellowship deferment, or who were in
an in-school deferment but who left school, because of their status as
an affected individual in this category. The holder of the loan is
required to maintain the loan in the graduate fellowship deferment or
in-school deferment status for a period not to exceed three years
during which the borrower is an affected individual in this category.
This period includes the time necessary for the borrower to resume his
or her graduate fellowship program or resume enrollment in the next
regular enrollment period if the borrower returns to school. The
Secretary will pay interest that accrues on a subsidized Stafford Loan
as a result of extending a borrower's eligibility for deferment under
this waiver.
Forbearance
Under section 464(e) of the HEA and 34 CFR 674.33(d)(2), there is a
three-year cumulative limit on the length of forbearances that a
Federal Perkins Loan borrower can receive. To assist Federal Perkins
Loan borrowers who are affected individuals in this category, the
Secretary is waiving these statutory and regulatory requirements so
that any forbearance based on a borrower's status as an affected
individual in this category is excluded from the three-year cumulative
limit.
Under section 464(e) of the HEA and 34 CFR 674.33(d)(2) and (3), a
school must receive a request and supporting documentation from a
Federal Perkins Loan borrower before granting the borrower a
forbearance, the terms of which must be in the form of a written
agreement. The Secretary is waiving these statutory and regulatory
provisions to require an institution to grant forbearance based on the
borrower's status as an affected individual in this category for a one-
year period, including a three-month ``transition period'' immediately
following, without supporting documentation or a written agreement,
based on the written or oral request of the borrower, a member of the
borrower's family, or another reliable source. The purpose of the
three-month transition period is to assist borrowers so that they will
not be required to
[[Page 59316]]
reenter repayment immediately after they are no longer affected
individuals in this category. In order to grant the borrower
forbearance beyond the initial twelve- to fifteen-month period,
supporting documentation from the borrower, a member of the borrower's
family, or another reliable source is required.
Under 34 CFR 682.211(i)(1), a FFEL borrower who requests
forbearance because of a military mobilization must provide the loan
holder with documentation showing that he or she is subject to a
military mobilization. The Secretary is waiving this requirement to
allow a borrower who is not otherwise eligible for the military service
deferment under 34 CFR 682.210(t)(9), 685.204(e)(7), and 674.34(h)(7)
to receive forbearance at the request of the borrower, a member of the
borrower's family, or another reliable source for a one-year period,
including a three-month transition period that immediately follows
immediately following, without providing the loan holder with
documentation. In order to grant the borrower forbearance beyond this
period, documentation supporting the borrower's military mobilization
must be submitted to the holder of the loan.
The Secretary will apply the forbearance waivers and modifications
in this section to loans held by the Department of Education.
Collection of Defaulted Loans
In accordance with 34 CFR part 674, subpart C--Due Diligence, and
682.410(b)(6), schools and guaranty agencies must attempt to recover
amounts owed from defaulted Federal Perkins and FFEL borrowers,
respectively. The Secretary is waiving the regulatory provisions that
require schools and guaranty agencies to attempt collection on
defaulted loans for the time period during which the borrower is an
affected individual in this category and for a three-month transition
period. The school or guaranty agency may stop collection activities
upon notification by the borrower, a member of the borrower's family,
or another reliable source that the borrower is an affected individual
in this category. Collection activities must resume after the borrower
has notified the school or guaranty agency that he or she is no longer
an affected individual and the three-month transition period has
expired. The loan holder must document in the loan file why it has
suspended collection activities on the loan, and the loan holder is not
required to obtain evidence of the borrower's status while collection
activities have been suspended. The Secretary will apply the waivers
described in this paragraph to loans held by the Department of
Education.
Loan Cancellation
Depending on the loan program, borrowers may qualify for loan
cancellation if they are employed fulltime in specified occupations,
such as teaching, as a civil legal assistance attorney, or in law
enforcement, pursuant to Sections 428J, 428L, 460(b)(1), and
465(a)(2)(A)-(M) and (a)(3) of the HEA, and 34 CFR 674.53, 674.55,
674.55(b), 674.56, 674.57, 674.58, 674.60, 682.216, and 685.217.
Generally, to qualify for loan cancellation, borrowers must perform
uninterrupted, otherwise qualifying service for a specified length of
time (for example, one year) or for consecutive periods of time, such
as five consecutive years.
For borrowers who are affected individuals in this category, the
Secretary is waiving the requirements that apply to the various loan
cancellations that such periods of service be uninterrupted or
consecutive, if the reason for the interruption is related to the
borrower's status as an affected individual in this category.
Therefore, the service period required for the borrower to receive or
retain a loan cancellation for which he or she is otherwise eligible
will not be considered interrupted by any period during which the
borrower is an affected individual in this category, including the
three-month transition period. The Secretary will apply the waivers
described in this paragraph to loans held by the Department of
Education.
Rehabilitation of Defaulted Loans
A borrower of a Direct Loan or FFEL Loan must make nine on-time,
monthly payments over ten consecutive months to rehabilitate a
defaulted loan in accordance with section 428F(a) of the HEA and 34 CFR
682.405 and 685.211(f). Federal Perkins Loan borrowers must make nine
consecutive, on-time monthly payments to rehabilitate a defaulted
Federal Perkins Loan in accordance with section 464(h)(1)(A) of the
HEA. To assist title IV borrowers who are affected individuals in this
category, the Secretary is waiving the statutory and regulatory
requirements that payments made to rehabilitate a loan must be
consecutive or made over no more than ten consecutive months. Loan
holders should not treat any payment missed during the time that a
borrower is an affected individual in this category, or the three-month
transition period, as an interruption in the number of monthly, on-time
payments required to be made consecutively, or the number of
consecutive months in which payment is required to be made, for loan
rehabilitation. If there is an arrangement or agreement in place
between the borrower and loan holder and the borrower makes a payment
during this period, the loan holder must treat the payment as an
eligible payment in the required series of payments. When the borrower
is no longer considered to be an affected individual in this category,
and the three-month transition period has expired, the required
sequence of qualifying payments may resume at the point they were
discontinued as a result of the borrower's status. The Secretary will
apply the waivers described in this paragraph to loans held by the
Department of Education.
Reinstatement of Title IV Eligibility
Under sections 428F(b) and 464(h)(2) of the HEA and under the
definition of ``satisfactory repayment arrangement'' in 34 CFR
668.35(a)(2), 674.2(b), 682.200(b), and 685.102(b), a defaulted title
IV borrower may make six consecutive, monthly, on-time payments to
reestablish eligibility for title IV student financial assistance. To
assist title IV borrowers who are affected individuals in this
category, the Secretary is waiving statutory and regulatory provisions
that require the borrower to make consecutive payments in order to
reestablish eligibility for title IV student financial assistance. Loan
holders should not treat any payment missed during the time that a
borrower is an affected individual in this category as an interruption
in the six consecutive, monthly, on-time payments required for
reestablishing title IV eligibility. If there is an arrangement or
agreement in place between the borrower and loan holder and the
borrower makes a payment during this period, the loan holder must treat
the payment as an eligible payment in the required series of payments.
When the borrower is no longer considered to be an affected individual
or in the three-month transition period for purposes of this notice,
the required sequence of qualifying payments may resume at the point
they were discontinued as a result of the borrower's status. The
Secretary will apply the waivers described in this paragraph to loans
held by the Department of Education.
Consolidation of Defaulted Loans
Under the definition of ``satisfactory repayment arrangement'' in
34 CFR
[[Page 59317]]
685.102(b), a defaulted FFEL or Direct Loan borrower may establish
eligibility to consolidate a defaulted loan in the Direct Consolidation
Loan Program by making three consecutive, monthly, on-time payments on
the loan. The Secretary is waiving the regulatory requirement that such
payments be consecutive. FFEL loan holders should not treat any payment
missed during the time that a borrower is an affected individual in
this category as an interruption in the three consecutive, monthly, on-
time payments required for establishing eligibility to consolidate a
defaulted loan in the Direct Consolidation Loan Program. If there is an
arrangement or agreement in place between the borrower and loan holder
and the borrower makes a payment during this period, the loan holder
must treat the payment as an eligible payment in the required series of
payments. When the borrower is no longer considered to be an affected
individual in this category or in the three-month transition period,
the required sequence of qualifying payments may resume at the point
they were discontinued as a result of the borrower's status as an
affected individual. The Secretary will apply the waivers described in
this paragraph to Direct and FFEL loans held by the Department of
Education and to commercially held FFEL loans.
Annual Reevaluation Requirements for Direct Loan and FFEL Borrowers
Under the Income-Based Repayment (IBR) and Income-Contingent Repayment
(ICR) Plans
Section 493C(c) of the HEA requires the Secretary to establish
procedures for annually determining a borrower's eligibility for
income-based repayment, including verification of a borrower's annual
income and the annual amount due on the total amount of the borrower's
loans. Section 493C(b)(6) of the HEA provides that if a borrower no
longer has a partial financial hardship, the maximum monthly payment
amount the borrower will be required to pay is an amount that does not
exceed the monthly amount paid under the standard repayment plan based
on a ten-year repayment period. Under 34 CFR 682.215(e), 682.221(e),
and 685.209, borrowers repaying under the IBR or ICR plan must be
evaluated annually to determine if the borrower continues to have a
partial financial hardship, if applicable, and whether the borrower's
monthly payment amount under the IBR or ICR plan should be recalculated
based on changes in the borrower's income or family size. Borrowers are
required to provide information about their annual income and family
size to the loan holder each year by the deadline specified by the
holder. A borrower who fails to provide the required information would
have his or her monthly payment amount adjusted to the amount the
borrower would pay under the ten-year standard payment plan.
The Secretary is waiving these statutory and regulatory provisions
to require loan holders to maintain an affected borrower's payment at
the most recently calculated IBR or ICR monthly payment amount for up
to a three-year period, including a three-month transition period
immediately following, if the borrower's status as an affected
individual in this category has prevented the borrower from providing
documentation of updated income and family size by the specified
deadline for the holder's receipt of that information.
Category 3: The Secretary is waiving or modifying the following
provisions of title IV of the HEA and the Department's regulations for
affected individuals who are serving on active duty or performing
qualifying National Guard duty during a war or other military operation
or national emergency as described in the SUPPLEMENTARY INFORMATION
section of this notice.
Institutional Charges and Refunds
The HEROES Act encourages institutions to provide a full refund of
tuition, fees, and other institutional charges for the portion of a
period of instruction that a student was unable to complete, or for
which the student did not receive academic credit, because he or she
was called up for active duty or for qualifying National Guard duty
during a war or other military operation or national emergency.
Alternatively, the Secretary encourages institutions to provide a
credit in a comparable amount against future charges.
The HEROES Act also recommends that institutions consider providing
easy and flexible reenrollment options to students who are affected
individuals in this category. At a minimum, an institution must comply
with the requirements of 34 CFR 668.18, which addresses the readmission
requirements for service members under certain conditions.
Of course, an institution may provide such treatment to affected
individuals other than those who are called up to active duty or for
qualifying National Guard duty during a war or other military operation
or national emergency.
Before an institution makes a refund of institutional charges, it
must perform the required Return of Title IV Funds calculations based
upon the originally assessed institutional charges. After determining
the amount that the institution must return to the title IV Federal
student aid programs, any reduction of institutional charges may take
into account the funds that the institution is required to return. In
other words, we do not expect that an institution would both return
funds to the Federal programs and also provide a refund of those same
funds to the student.
Category 4: The Secretary is waiving or modifying the following
provisions of the HEA and the Department's regulations for dependents
and spouses of affected individuals who are serving on active duty or
performing qualifying National Guard duty during a war or other
military operation or national emergency as described in the
SUPPLEMENTARY INFORMATION section of this notice.
Verification Signature Requirements
Regulations in 34 CFR 668.57(b) and (c) require signatures to
verify the number of family members in the household and the number of
family members enrolled in postsecondary institutions. The Secretary is
waiving the requirement that a dependent student submit a statement
signed by one of the applicant's parents when no responsible parent can
provide the required signature because of the parent's status as an
affected individual in this category.
Required Signatures on the Free Application for Federal Student Aid
(FAFSA), Student Aid Report (SAR), and Institutional Student
Information Record (ISIR)
Generally, when a dependent applicant for title IV aid submits the
FAFSA or submits corrections to a previously submitted FAFSA, at least
one parental signature is required on the FAFSA, SAR, or ISIR. The
Secretary is waiving this requirement so that an applicant need not
provide a parent's signature when there is no responsible parent who
can provide the required signature because of the parent's status as an
affected individual in this category. In these situations, a student's
high school counselor or the FAA may sign on behalf of the parent as
long as the applicant provides adequate documentation concerning the
parent's inability to provide a signature due to the parent's status as
an affected individual in this category.
Electronic Access to This Document: 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
[[Page 59318]]
and the Code of Federal Regulations is available via the Federal
Digital System at: www.gpo.gov/fdsys. At this site 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). To use PDF you must have Adobe Acrobat Reader, which is
available free at the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at:
www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal
Supplemental Educational Opportunity Grant Program; 84.032 Federal
Family Education Loan Program; 84.032 Federal PLUS Program; 84.033
Federal Work Study Program; 84.038 Federal Perkins Loan Program;
84.063 Federal Pell Grant Program; and 84.268 William D. Ford
Federal Direct Loan Program.)
Program Authority: 20 U.S.C. 1071, 1082, 1087a, 1087aa, Part F-
1.
Dated: September 24, 2012.
David A. Bergeron,
Acting Assistant Secretary for Postsecondary Education.
[FR Doc. 2012-23831 Filed 9-26-12; 8:45 am]
BILLING CODE 4000-01-P
